Liquid Sidechain Paused Following Massive 3,998 BTC Withdrawal

The Liquid sidechain is currently offline after nearly 4,000 bitcoin were removed from its federation wallet this past Sunday. The protocol team moved quickly to pause the network once the activity was detected.

Onchain data shows the person who moved the funds identified themselves as a white hat hacker. Blockstream confirmed that the assets were moved using a valid authorization key rather than a compromised one. This suggests the incident was an internal security test or an authorized recovery rather than a traditional hack.

While the funds appear to be accounted for, the pause remains in effect while the team reviews the security protocols. Traders should keep an eye on official updates to see when the network will be cleared to resume normal operation. This event highlights how even institutional grade sidechains rely heavily on managed access keys for their federation wallets.