SideSwap says the Liquid Network is back online and its markets have reopened, but L-BTC holders still cannot redeem the token for regular Bitcoin. Trading and swaps have resumed, while redemptions through the Liquid Federation remain suspended pending a security review.

Liquid markets and peg-ins reopen

Liquid is a Bitcoin sidechain, or separate network, linked to Bitcoin. Users hold L-BTC, a token intended to be backed one-for-one by real Bitcoin. In an announcement on September 10, SideSwap said the Liquid Network was producing blocks again and that swaps and all of its markets were open:

SideSwap, a trading venue built on Liquid, said on September 11 that it had also reopened peg-ins—the process of converting Bitcoin into L-BTC. Under its stated terms, one Bitcoin is credited as one L-BTC, minus SideSwap’s standard 0.1 percent fee:

The reopening of markets does not mean that redemptions have resumed. SideSwap said L-BTC peg-outs remain closed both on the network and at SideSwap while the Liquid Federation conducts its security review.

SideSwap also said it does not set the price of L-BTC. Prices are determined by buyers and sellers through its open order books. The company warned that trading could involve large price swings and thin order books during the first hours after reopening. That statement was a warning about possible conditions, not a measurement of the market’s actual reaction.

Other tokens on Liquid remain operational, according to SideSwap. The company said USDt and DePix are backed independently by their respective issuers, and that DePix issuance and redemption, as well as SideSwap swaps and markets, continue.

L-BTC cannot currently be redeemed for Bitcoin

The key distinction for holders is that the ability to trade L-BTC is separate from the ability to cash it out. At present, users can enter Liquid by converting Bitcoin into L-BTC at a one-to-one rate before the applicable fee, but they cannot reverse that process and redeem L-BTC for Bitcoin through the Federation.

SideSwap reported 4,229 L-BTC in circulation on September 11, citing liquid.network. This is a dated figure reported by SideSwap, not an independently verified live balance.

Reported L-BTC circulation: 4,229 L-BTC

On the same date, SideSwap reported 3,627 BTC in the Federation reserve. The reported reserve was below the reported circulating supply, which SideSwap identified as the reason redemptions remain paused. Those figures do not establish the market price of L-BTC.

Reported Federation reserve: 3,627 BTC

An earlier SideSwap snapshot from September 10 showed 4,205 L-BTC in circulation and 3,597 BTC in reserve. That was a separate, older reading and should not be combined with the September 11 figures.

Infrastructure provider Blockstream reported a similar status. In a September 10 update issued at 10:00 UTC, it said functionary and bridge-node updates had been deployed and that block production had resumed. At that stage, block production was occurring without transactions, while peg operations—including PAK-authorized peg-outs—remained suspended.

Questions about the restart remain unresolved

The available updates do not specify when redemptions will resume. No fetched official source establishes a deadline for restarting peg-outs, identifies a funding source for restoring reserves, or confirms that one-for-one backing has been completed.

Claims that the peg has already been fully restored are therefore not established by the available information. SideSwap relayed a commitment from Blockstream’s Adam Back regarding future coverage, while also reporting that reserves remained below circulating supply. A commitment to future coverage is not the same as completed recapitalization.

There is also no verified measurement of L-BTC’s price reaction following the restart. A September 12 review by CryptoSlate said the public record did not contain a reproducible post-restart L-BTC price, bid-ask spread, order-book depth, slippage measure, or cross-venue comparison. Reserve coverage is not equivalent to a trading discount.

For broad context only, Bitcoin was trading at $77,256 with a 0.43 percent 24-hour move, while the wider market’s Fear and Greed reading was 63, classified as “Greed.” Neither figure measures the Liquid incident or establishes how L-BTC is trading.

The situation highlights a broader issue in digital assets: how an asset is backed and redeemed can matter as much as where it trades. Similar questions arise in other crypto developments involving bank-issued stablecoin experiments, payments firms, and expanding exchange venues.

For L-BTC holders, the current position is straightforward: the token can be traded on SideSwap, but it cannot currently be redeemed for Bitcoin through the Federation. SideSwap said users who do not need L-BTC can wait until peg-outs reopen.

This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk.