Blockstream has refused to pay a ransom or reward for the return of Bitcoin taken from the Liquid Network, maintaining that the unauthorized removal of assets was theft rather than responsible disclosure.

The incident began with the withdrawal of roughly 4,000 BTC from Liquid’s reserves. The Bitcoin was worth about $320 million at the time. The attackers claimed to be white-hat hackers and demanded engagement with Blockstream while retaining control of the funds.

About 3,400 BTC was later returned, leaving roughly 598.5 BTC still controlled by the attackers. On-chain messages show that the dispute has effectively unfolded in public, with the Bitcoin blockchain preserving evidence of the transactions and fund movements.

Blockstream’s refusal is based on concerns that paying for the return of stolen assets could create a harmful incentive: compromise a protocol, take its assets, and then negotiate a reward for returning them. That distinction makes the case relevant beyond the immediate loss, because it sets the terms for how a network may respond when an alleged security incident involves both unauthorized withdrawals and a subsequent demand for compensation.

The company is instead treating the remaining Bitcoin as stolen property. It said it would work with law enforcement, exchanges, service providers, and forensic experts to identify those responsible and pursue recovery of the funds through legal means. The practical focus now is on tracing the remaining Bitcoin, coordinating with the organizations that may encounter the funds, and determining whether any additional recovery is possible through those channels.

Blockstream said:

Bitcoin is transparent by design and the community is made up of the most sophisticated engineers, cryptographers, and white-hat hackers globally. Transactions do not disappear, and neither does the evidence they leave behind.

We will not pay for the return of stolen property.

We will not abandon our users.

The Bitcoin community will not stop pursuing the funds.

The position comes as crypto protocols increasingly hold assets at institutional scale. Blockstream is arguing that refusing to negotiate establishes a stronger long-term precedent: vulnerabilities may be rewarded, but stolen assets should not become bargaining chips.

The incident follows the Liquid Network exploit previously reported by BitcoinKE: Bitcoin Settlement Network, Liquid, Hit by Over $300 Million Exploit. The company’s position also relates to a broader debate over how decentralized organizations respond to disputes, including the case study How This DAO Settlement Sets a Precedent on Future DAO Dispute Resolutions.