The dispute between Blockstream and the party claiming to be a white-hat hacker has taken a sharper turn, according to Samson Mow’s latest update.
The hacker has accused Blockstream of serious security failures, while claiming that the company allocated only $1.5 million, or possibly nothing, to secure $5 billion in assets.
Fresh Clash With Blockstream
Calling this a “flagrant neglect of security,” the hackers demanded that Blockstream pay a 10% bug bounty from its own funds and warned that failure to do so could result in a 15% loss for Liquid users.
The message also accused Blockstream of being “delusional, greedy, and arrogant” over its handling of security. The hackers further said they planned to publish the private key needed to decrypt their conversations afterward.
Meanwhile, Liquid has kept the sidechain paused as Blockstream and Federation members work on further security fixes, address a chain split, and prepare for a coordinated restart. Users have also been told not to send Bitcoin to Liquid peg-in addresses until the network is back online.
The latest message comes after roughly 4,000 BTC, worth around $320 million at the time, was taken from Liquid’s Federation wallet on September 6. The party behind the withdrawal initially claimed to be white-hat hackers and said the funds would be returned once Blockstream fixed the security issue and patched all affected nodes. After Blockstream confirmed the bridge nodes had been patched, 3,400 BTC was returned to the Federation wallet, while roughly 598 units remained with the hackers.
Consequences Ahead
Mow, in a separate tweet, warned the hackers that they may be underestimating the consequences of what they have done. He said that Blockstream’s decision to communicate with them through PGP was already a “courtesy” and questioned whether publicly admitting to taking the BTC and then demanding a bounty was really a “wise move.”
The former Blockstream Chief Strategy Officer also suggested that the group had left behind more clues than it might realize and cautioned that trying to return the funds does not necessarily mean they can simply walk away from the incident.
“As a white hat, the road only widens; as a black hat, you’re forever on edge. Dreaming of walking away with assets unscathed is nothing but delusion. Some doors, once opened, can never be closed again.”
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