Liquid Network Paused After $300M Bitcoin Withdrawal

The Liquid Network is currently offline after individuals withdrew nearly 4,000 Bitcoin, worth roughly $300 million, from its federation wallet. The group behind the incident claims to be white hat hackers, suggesting the move was a friendly attempt to highlight a vulnerability. Despite the large movement of funds, the platform reports that other assets like USDT and various real world assets remain safe.

The team at Blockstream stated that the withdrawal occurred through the SideSwap Peg out Authorization Key, though they confirmed that this specific key and all others remain secure. Because the situation is still developing, bridge nodes have been disabled to stop further unauthorized activity. This effectively pauses the sidechain until the team can reach a resolution.

Exchanges have been notified and many have already suspended deposits and withdrawals for LBTC to protect their users. Blockstream is currently attempting to contact the parties involved using on chain signed messages. While this incident impacts Liquid wallets, regular Bitcoin transactions remain fully functional on other services. We are watching for updates on how the team plans to recover the assets and resume network operations.