Blockstream Liquid Network Hit by 4,000 BTC Hack

Roughly 4,000 BTC, valued at about 320 million dollars, was moved out of the Blockstream Liquid Federation wallet on Sunday. The hacker bypassed security protocols by using a regular peg out request that gathered 11 of the required 15 signatures. Following the incident, the Liquid Network sidechain was paused while officials investigate the breach.

SideSwap, the service that processed the transaction, pointed to a flaw in Liquid Bitcoin originating from an Elements bug. While the hacker left an on chain message claiming to be a whitehat, the security breach has sent shockwaves through the community. Exchanges and bridge nodes have suspended services involving Liquid Bitcoin to prevent further losses.

Mempool.space, which monitors federation holdings, confirmed the massive withdrawal in real time. Analysts are now looking closely at the underlying codebase, noting that key parts of the system had not seen significant updates in years. Security experts are questioning how such a large amount of assets could be drained without triggering the network’s emergency backup path.

This event highlights the risks associated with sidechains and federation wallets. As of now, the Liquid Network remains paused while developers work to resolve the vulnerability. Traders should monitor official updates from the Liquid team before attempting any future deposits or withdrawals.