On Monday, November 3, the Liquid Federation said its bitcoin reserves are fully restored. Every LBTC is backed by one bitcoin again. The announcement closes a hole that opened on September 6, when a software flaw let an attacker mint about 4,000 LBTC with nothing behind them and redeem them for real bitcoin.
The damage was stark. Blockstream's incident report put the reserve at about 4,205 BTC before the exploit and 197 BTC after it. The attacker returned 3,400 BTC the next day but kept about 598 BTC. That gap is what closed now: four deposits totalling about 602.5 BTC, the last of them 250 BTC on November 2. Explorer data cited by Bitcoin.com puts 4,270.54 LBTC in circulation, backed by the same amount of bitcoin.
What the federation did not explain
The federation did not say where the last roughly 600 BTC came from. Federation board member Samson Mow pointed to Blockstream as the source of the replacement funds, in remarks reported by several outlets. That is Mow's account, not the federation's statement. And one distinction matters: full backing is not the same as recovered funds. Replacement deposits closed the gap; the roughly 598 BTC kept by the attacker has not come back. Blockstream refused to pay a ransom for the remainder, calling the withholding theft rather than white-hat work.
What is back to normal, and what is not
Swaps between BTC and LBTC through providers such as SideSwap returned to 1:1 several weeks ago. Direct withdrawals through the federation remain under tighter operational controls. Blockstream CEO Adam Back published a screenshot of the network dashboard showing assets matching liabilities, with a reserve deficit of 0.00 BTC, and the federation says anyone running a Liquid node can check the reserves directly.
Back also named three hardened lines of defence: refreshed peg-out authorisation keys now held in cold hardware wallets, proof validation caches switched off alongside a bug fix, and consensus rules hardened to fail closed. The network has been through several third-party audits, he said, and the federation promised governance details in the coming weeks. His advice to developers is worth repeating in plain terms: do not trust a machine-suggested code fix without checking it yourself. That is advice, not proof the hole can never reopen. The old-version hot wallet warning is in our BTCPay article. A very different emergency recovery, by Arbitrum's council, is in our Arbitrum article.
Sources: CoinDesk (Nov 3, 2026), Decrypt (Nov 3, 2026), Bitcoin.com (Nov 3, 2026). Figures and status are snapshots at writing time, early November 4, 2026 WIB, and can change.
Written by Mastechon
Writing about crypto and Super Intelligence: market news, new projects, Super Intelligence models, and early opportunities like airdrops and testnets. Every piece starts from the official announcement, with the costs worked out up front.
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