Why is Bitcoin development firm Blockstream on the warpath against The Block? Earlier today, Blockstream CSO Samson Mow harassed Block hack Larry Cermak on Twitter for publishing a slightly damning (presumably damning—it’s paywalled) piece on “Liquid,” the off-chain, inter-exchange payments network the firm is developing.

“I published a data-driven article that looked at the publicly available data about Liquid,” Cermak told Decrypt. “Unfortunately, someone who runs the Liquid twitter account didn’t like what I posted so the account decided to block me. Then Samson called me a moron for starting conspiracy theories about Blockstream and Bitfinex.”


“While the only thing I did was ask a question whether it’s odd that Bitfinex is an early investor in Blockstream and their two most visible employees are publicly supporting iFinex/Tether.”

Odd, right?

It’s also worth noting that Blockstream execs and affiliates are continually parroting the same lines exonerating Bitfinex. These comments treat the alleged $850 million hole in the exchange’s finances as a sort of wholesome, unregulated version of fractional reserve banking. You know, the thing Bitcoin was expressly developed to avoid.

Again, odd.


The answer, however, may be shockingly simple: Earlier today, Bitfinex announced that it would be integrating, er, “Liquid by Blockstream,” which will link it up with other exchanges and enable “fast and private Bitcoin transactions around the network.”

One source, a friend to the major exchanges, said the sudden Bitfinex/Liquid intersection was downright weird. “I spoke to several exchanges,” he said. “And most of them told me they have literally no reason to implement Liquid.” (We have reached out to several exchanges ourselves and will update with any response. We have also reached out to Blockstream.)

Could there be a conflict of interest? Cermak, the target of Blockstream’s ire, professed himself unsure, but said Blockstream, nevertheless, acted out of order. “I think there could be [a conflict of interest] and it’s worth discussing—instead of calling analysts morons for even bringing it up,” he explained.

“The bottom line is that Bitfinex invested early on in Blockstream and that they are arguably the most important partner for Liquid to get off the ground. Would Blockstream be very badly hurt if Bitfinex went away? Yes.”

Daily Debrief Newsletter

Start every day with the top news stories right now, plus original features, a podcast, videos and more.