Effectively a fractionally reserved bank without withdrawals.

"Why didn't I think of that?!!!!" - Jamie Dimon (probably)

"Most of the developers who worked on Liquid and introduced the initial bug, or missed it, have long since moved on..."

I think it's worth noting here that apparently it wasn't the 'initial' bug that was exploited; but a buggy fix to that recently discovered 'initial' bug. Regardless, it is absolutely Blockstream's responsibility for critical bugs not to continue to be missed regardless of the turnover of their developers.

That said, despite the obviously deserved hit to Blockstream's reputation, I agree they shouldn't be paying any ransom.

BTW, this was a theft from Blocksteam's users in the same way a bank robbery is a theft from the banks' account holders (i.e. it isn't). If a bank ends up with no choice but to rug those clients due to resulting issues of insolvency; then, those clients just happened to trust the wrong bank.

*none of this is intended to imply that Blockstream should never be used for anything again in the future... just stay informed of the risks; and proceed accordingly with caution.

*also worth noting that the federated model of custody was revealed to completely breaks down to mere theater when each member uncritically relies on the same code to direct them on which transactions to authorize.

Nice! Looks like peg-outs still not active. Someone out there must *really* be confident that reactivation of peg-outs is imminent in order to be willing to swap BTC for L-BTC in the meantime.

"How dare *YOU* not allow *ME* to make use of *YOUR* relays however *I* see fit?"

LOL! Now THAT must be some kind of fucking joke.

Na... they're commie in name only. That is, the means of production aren't owned by the public; but owned privately at the pleasure of the state. That's more fascist than commie; but ya, that pretty much describes both them and us.

🤷 Ex-Lehman Bro's executive? 🤣

Peg-ins on; but Peg-outs off? That doesn't sound scammy at all.

"... the stock market says it isn't" How is the market saying this, exactly? by NGU?
Yeah, that's what a bubble looks like.

*note: not all NGU are bubbles; but all bubbles are NGU (until they pop).

I agree that federated custody wasn't the cause of this issue.

However, a federated custody whose members don't individually competently scrutinize the unifying software on which they collectively operate that has been provided by a single development entity is de facto 'federated' in name only.

I also hope the assets are returned to Liquid and that it continues to improve.

That said, Liquid's reputation in particular - and Blockstream more generally - will undoubtedly take a huge hit... and, rightfully so, IMO.

The tech being worked out by Liquid is absolutely important to the success of Bitcoin.

It's not important that that tech necessarily ultimately be worked out specifically by Liquid.

Seems to me it was pre-paid - when it was voluntarily traded for 'paper' BTC.