Purported White Hats Pull $320M From Liquid Reserve, Putting L-BTC Peg Under Scrutiny
Liquid’s halt turned on the part of the network that matters most to L-BTC holders: the reserve mechanism behind its stated 1:1 Bitcoin peg. Nearly 4,000 BTC left the federation wallet through the peg-out path, while Liquid said the federation’s keys had not been compromised.
Liquid Network offers faster Bitcoin settlement and issues tokenised assets. Still, the incident that halted the sidechain occurred at a more centralised part of its design: the federation-operated mechanism connecting L-BTC with the Bitcoin held in reserve.
We are aware of a security incident on @Liquid_BTC. Purported white-hat hackers have withdrawn ~4,000 BTC (~$320 million) from the Liquid Federation wallet. The @Blockstream team is working on contacting them on-chain with a signed message.What we know so far is that the funds…
— Liquid Network 🌊 (@Liquid_BTC) September 6, 2026
How the Peg-Out Mechanism Became the Failure Point
Under Liquid’s documented model, each L-BTC is intended to be backed by an equivalent amount of BTC held in the federation wallet. Moving assets in the opposite direction requires destroying L-BTC before the federation releases BTC through a peg-out.
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