Blockstream Faces Escalating Demands from Alleged White-Hat Hacker
The dispute between Blockstream and an individual claiming to be a white-hat hacker has intensified, according to a recent update from Samson Mow. The hacker has leveled serious accusations against Blockstream regarding security failures, asserting that the company allocated a mere $1.5 million, or potentially no funds at all, to safeguard assets valued at $5 billion.
Describing this as “flagrant neglect of security,” the hacker has demanded that Blockstream pay a 10% bug bounty from its own reserves. Failure to comply, the hacker warned, could lead to a 15% loss for users of the Liquid sidechain. The message also characterized Blockstream’s approach to security as “delusional, greedy, and arrogant.” Furthermore, the hackers indicated plans to publish the private key necessary to decrypt their communications.
In the interim, Liquid has maintained its sidechain in a paused state as Blockstream and Federation members work on implementing further security fixes, addressing a chain split, and preparing for a synchronized restart. Users have been advised to refrain from sending Bitcoin to Liquid’s peg-in addresses until the network is fully operational again.
This latest development follows the withdrawal of approximately 4,000 BTC, valued at around $320 million at the time, from Liquid’s Federation wallet on September 6. The entity responsible for the withdrawal initially identified itself as white-hat hackers, stating that the funds would be returned once Blockstream rectified the security vulnerability and patched all affected nodes. Following Blockstream’s confirmation that the bridge nodes had been patched, 3,400 BTC was returned to the Federation wallet, with roughly 598 units remaining in the hackers’ possession.
In a separate communication, Mow cautioned the hackers that they might be underestimating the repercussions of their actions. He described Blockstream’s decision to engage with them via PGP as a “courtesy” and questioned the wisdom of publicly admitting to taking the Bitcoin and subsequently demanding a bounty.
The former Blockstream Chief Strategy Officer also suggested that the group may have inadvertently left behind more evidence than they realize. He cautioned that attempting to return the funds does not guarantee an unblemished exit 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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