Liquid Network L-BTC Redemptions Remain Suspended After Attack

Published: 2026-09-23 15:34:40 |

Liquid Network’s L-BTC redemptions remain suspended after the network was attacked on 6 September, according to Canadian Bitcoin exchange and wallet provider Bull Bitcoin. Users currently cannot convert L-BTC back into Bitcoin through the platform. Bull Bitcoin expects redemption services to resume within 30 days, but stressed that the timeline is not guaranteed. The suspension has also forced Bull Bitcoin to temporarily disable incoming Lightning Network payments because its liquidity management depends on L-BTC redemptions. The attacker initially transferred nearly 4,000 BTC from the protocol and later returned about 3,400 BTC. The attacker still holds 598.50 BTC, worth more than $51 million. Liquid Network said on 17 September that block production, network transactions and L-BTC transfers had returned to normal. However, the continued redemption halt highlights lingering liquidity, custody and confidence risks for L-BTC users and Bitcoin market participants.

Bearish

The immediate market impact is bearish for L-BTC and the broader Liquid Network ecosystem because users remain unable to redeem the asset for BTC. A prolonged redemption freeze can create a discount between L-BTC and BTC, reduce liquidity, and increase counterparty and custody concerns. Bull Bitcoin’s temporary suspension of incoming Lightning payments is an additional sign of operational stress. The reported loss is significant: the attacker still controls 598.50 BTC, worth more than $51 million. Although most of the nearly 4,000 BTC taken from the protocol was returned, the remaining balance and uncertain recovery timeline may keep selling, withdrawal and risk-reduction pressure elevated in the short term. Similar incidents involving bridge exploits, wrapped tokens and exchange freezes have historically caused sharp liquidity deterioration and lasting confidence damage, even after services resume. The effect on Bitcoin itself is likely to be limited because the incident is concentrated in Liquid Network infrastructure and L-BTC redemption mechanisms rather than the Bitcoin base layer. If Liquid confirms a secure restoration and full 1:1 redemptions, the pressure could ease over the longer term. Until then, traders may monitor the L-BTC/BTC market, redemption announcements, exchange liquidity and movements from the attacker’s address. The overall classification is bearish, with the strongest downside risk concentrated on L-BTC and Liquid-related projects.