Bitcoin sidechain Liquid Network once again holds enough bitcoin to back every LBTC token in circulation, the Liquid Federation announced on X early Tuesday, closing a gap of roughly 600 BTC that had stayed open since an exploit in September.

The Federation said its reserves had been “fully restored, reestablishing 1:1 BTC backing for all LBTC.” Its post did not say who supplied the bitcoin or how much was added. Samson Mow, a Federation board member who previously worked at Blockstream, said on Monday on X that Blockstream provided the funds.

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Reserves and supply line up

Liquid’s public dashboard API, checked by Unchained on Tuesday morning, showed 4,270.54 BTC held in the Federation’s reserves against 4,270.54 BTC pegged into Liquid, a difference of 52 satoshis. Anyone running a Liquid node can also check the Federation’s Proof of Reserves directly, the Federation said.

Blockstream builds Elements, the software Liquid runs on. On Sept. 6, a flaw in Elements let an attacker create about 4,000 LBTC with nothing behind them and use the tokens to pull bitcoin out of the Federation’s wallet. The attackers sent back 3,400 BTC the next day but kept about 598.5 BTC, Unchained reported at the time.

Peg-outs and governance

The Federation said swaps between BTC and LBTC came back “several weeks ago” at a 1:1 rate through participating swap providers. Its post did not address direct peg-outs, the route the attacker used. On Uneasy Money, Venice Head of Strategy Jon described how the coins left through SideSwap, a Federation member with an allow-listed withdrawal address that, he said, would “just let anyone show up with an address and withdraw from Liquid” and then forward the coins.

The Federation also said it is reworking its governance structure, assigning clearer oversight roles and adding new technical and operational safeguards. It said it would share more on those plans “in the coming weeks.”

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