DAY ELEVEN AND THE LIQUID PEG IS STILL A PROMISE — BLOCKSTREAM: “IT IS NOT WHITE-HAT ACTIVITY. IT IS THEFT.” — HACKER KEEPS 598.5 BTC AND HOLDERS CANNOT PEG OUT

A federated peg is a promise made by a committee: put a bitcoin in, and the signers hand a bitcoin back when you ask. On September 17 that promise is eleven days suspended. Blockstream’s own status page, last touched September 10, says “Peg operations, including PAK-authorized peg-outs, remain suspended,” and gives no date. SideSwap, which runs the peg-out counter, said on September 11 that “Peg-out stays closed, on the network and at SideSwap.” Bitcoin.com read liquid.network on September 17: 4,234.76 L-BTC in circulation, 3,632.23 BTC held by the Federation. That is 602.53 BTC of L-BTC with nothing behind it. Here is what you can check and what you must trust. Checkable: the thief’s note sits on the Bitcoin chain in block 966,199, moving 598.50011393 BTC and demanding ten percent “or you will cause all your holders a 15% loss for your irresponsibility and stinginess.” Checkable: the shortfall, on any Liquid explorer. Trusted: Blockstream’s September 11 line, “We will not pay for the return of stolen property. We will not abandon our users,” and Adam Back’s word, as SideSwap relays it, that the peg will be covered one to one. Mechanically, today: you can move L-BTC, trade it on SideSwap at whatever the market pays, even peg in. You cannot peg out. The door out is locked and the keyholders have not said when it opens. Blockstream is the party selling the “covered” promise; count it when the bitcoin lands, not before. At the time of this writing, bitcoin was $76,239.