Supposed White-Hat Hackers Drain $320 Million in BTC From Liquid Network, Say They’ll Return It After Fix

Bitcoin Layer 2 network Liquid Network has reported a security incident in which purported white-hat hackers withdrew approximately 4,000 BTC, worth $320 million, from the Liquid Federation wallet.

Blockstream is attempting to contact the parties involved through a signed on-chain message.

Network Bug Must Be Fixed First

In an update, Liquid said the funds were withdrawn using the SideSwap PAK (Peg-out Authorization Key) but stated that the key itself was not compromised and that no other keys were in jeopardy. Crypto exchanges have been informed and have already suspended, or are preparing to suspend, LBTC deposits and withdrawals.

Liquid said other assets on the network, including USDT, DePix and real-world assets, were not affected. The network has also temporarily disabled its bridge nodes, meaning new transactions cannot be submitted. As a result, the sidechain is effectively paused while the issue is being addressed.

“Liquid wallets will be impacted, and we’re sorry for any inconvenience. Federation members are actively working on resolving this so we can restore normal network activity.”

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