Liquid Network (@Liquid_BTC) has fully restored the 1:1 Bitcoin backing of its LBTC tokens after a major security incident that allowed 4,000 unbacked LBTC to be minted through a core codebase vulnerability. The attacker, claiming white-hat status, initially drained 4,000 BTC before negotiating through Bitcoin's OP_RETURN function to return 85% of the assets. The remaining 600 bitcoin:native was kept as an unauthorized bounty, leaving a deficit of around $47 million in the network's reserves. To bridge this gap and protect ecosystem integrity, Blockstream directly stepped in to cover the missing 600 BTC. With public dashboards now showing 4,270.54 BTC matching the total tokenized LBTC, the Layer-2 protocol has fully restored reserve backing and reaffirmed its long-term resilience as a Bitcoin sidechain.