SECURITY ALERT

The vault is full again. The door is still shut.

The Liquid Federation said early on Tuesday that the bitcoin reserve behind LBTC is “fully restored, reestablishing 1:1 BTC backing for all LBTC”, in a post on X at 00:03 UTC.

The last gap closed with two deposits on Monday evening totalling 550 BTC.

That is about $42.3 million at Kraken’s price of $76,875 at 05:00 UTC.

How was the gap closed?

The exploit in September left about 602 BTC unreturned, Blockstream said in its 23 Sep assessment.

At 20:51 UTC on Monday, Samson Mow, who says he sits on the federation’s board, wrote that “another 300 BTC” had moved to the federation wallet and the shortfall was “now reduced to 250 BTC.”

At 22:29 UTC he posted: “250 BTC added, closing out the remaining shortfall.”

We checked both on-chain.

  • 2 Nov, 20:47 UTC. 300 BTC confirmed in block 974,299, in transaction 2701150a160219c13c5a580bc7c93aeaee69bf5810b24cfffdc065d879fa4ed5.
  • 2 Nov, 22:04 UTC. 250 BTC confirmed in block 974,307, in transaction 531088ee8be6deadfd4fe1d1a021d9bd17d8e39c5969c91435fcf3542bd7ef55.

Both paid the same address: bc1qdlld6antmv4xug242ed83q7k4rqw50cwfns38szx4qu2f4jwaxxsuhwxxr.

That address had also received 50 BTC on 28 Oct. Swap provider SideSwap says it had earlier put in 2.5 BTC and 50 BTC.

Add it up and the 602 BTC hole is roughly closed.

Who paid?

Where did the money come from?

The federation did not say.

Asked on X, Mow answered: “As stated many times, Blockstream.”

We could not find a Blockstream statement confirming it.

What can holders do now?

What has not changed yet

Direct peg-outs, the federation’s own route from LBTC back to bitcoin, are not yet back.

In its 20 Oct recovery update, the federation said peg-outs would return only after full backing, through a controlled restart for holders of peg-out authorization keys.

Tuesday’s post did not give a date. It said node operators can verify the reserve and that details on governance and new safeguards will follow “in the coming weeks”.

We covered the earlier stage when Liquid restored swaps but kept peg-outs shut.

What LBTC holders can do now

  • Swaps through providers still work. Check the quoted rate against 1:1 before you convert.
  • Treat any “early peg-out” offer by direct message as a scam. The federation announces through its own channels.
  • Verify the reserve yourself if you run a node, or wait for the federation’s dashboard figure.

For how federated custody works, see what a crypto custodian does. In other recovery news, see Binance’s second withdrawal batch.

The money is back. When does the door open?

Corrections and new evidence: [email protected]

Related: Blockstream has since launched an enterprise custody product built with Thales hardware

This article is for information only and is not investment advice.