White Hat Hackers Drain $320 Million from Liquid Network

The Liquid Network is currently dealing with a massive security incident involving the withdrawal of 4,000 BTC, valued at approximately $320 million. The funds were pulled from the Liquid Federation wallet using a SideSwap peg out authorization key. Blockstream, the team behind the network, states that the key itself was not compromised, and other assets on the chain remain safe.

In response to the situation, the network has temporarily disabled bridge nodes. This has essentially paused the sidechain, meaning users cannot currently submit new transactions. Major crypto exchanges have been notified and have taken steps to suspend LBTC deposits and withdrawals while the team works on a fix.

A public dialogue is currently playing out on the Bitcoin blockchain between Blockstream and the party responsible for the funds. The person behind the withdrawal claims to be a white hat hacker. They have stated that they plan to return the money once a specific network bug is resolved, citing risks to the chain at the current commit level.

While the situation remains ongoing, some industry experts are skeptical about the motives behind this move. Skeptics note that the tactics resemble previous high profile crypto exploits rather than standard security research practices. For now, the community is waiting to see if the funds are returned as promised once the network is patched.