Liquid Network paused after 4,000 BTC worth $320 million withdrawn from wallet
Liquid Network paused after 4,000 BTC worth $320M were withdrawn via SideSwap's PAK; the PAK itself is uncompromised. Bridge nodes disabled, some exchanges paused L-BTC. Other assets unaffected. Blockstream contacted actors, possibly white-hat. Investigation ongoing.
The Liquid Network has suffered a significant security breach, with approximately 4,000 Bitcoin reportedly withdrawn from its Federation wallet. The stolen Bitcoin is valued at around $320 million, raising concerns across the cryptocurrency industry.
In a post on X, AQUA Wallet said the withdrawals were carried out using SideSwap's Peg-out Authorisation Key (PAK). The wallet provider said the PAK itself was not hacked and there was no indication that any other keys had been compromised. The Blockstream team has since attempted to contact the parties behind the withdrawals through a signed on-chain message.
Liquid network pauses transactions
According to AQUA Wallet, Liquid Federation members have temporarily disabled bridge nodes. This has prevented new transactions from being processed on the Liquid sidechain and temporarily halted network activity while the incident is investigated.
Crypto exchanges have also been alerted. A few sites have suspended, or are expected to suspend, transactions with Liquid Bitcoin (L-BTC).
Other Liquid assets are reportedly unaffected
The incident seems to be restricted to Liquid Bitcoin's ecosystem. AQUA Wallet said other assets operating on Liquid, including USDT, DePix and real-world asset tokens, are not affected by the security incident.
Federation members may need to contain the situation and return to normal operations, but you may still see disruptions to liquid wallets.
Blockstream investigates $320 million Bitcoin movement
The Blockstream team, which is involved in the Liquid ecosystem, is trying to reach out to the parties that accepted the money. AQUA Wallet said that the would-be attackers were “white-hat hackers", but the situation with the withdrawals is still under investigation. Individuals can trace the incident's Bitcoin on blockchain explorers such as Mempool's Liquid network explorer.
Liquid users may experience disruptions to L-BTC transactions for the time being, while Liquid's federation members conduct a thorough investigation to determine how the network can safely continue normal operations.
About the Author
Pragya is a Technology reporter with over four years of experience in digital media and content writing. She holds a Master’s degree in Journalism and has covered a wide range of stories spanning space, smartphones, gadgets, artificial intelligence, emerging technologies and the ways technology is transforming everyday life. She focuses on breaking down complex technology and science developments into clear, engaging, and reader-friendly stories, with a keen interest in emerging trends and their real-world impact. Before joining her current newsroom, Pragya worked with News9Live, where she covered the technology beat extensively, reporting on smartphones, consumer technology, AI, space and science, while also contributing to video and visual content. Her experience includes breaking news, explainers, SEO-driven stories, product coverage, interviews, unboxing videos and live event reporting. She has also covered major technology and AI events, giving her experience in both newsroom and on-ground reporting. Beyond journalism, Pragya is an avid gamer and a passionate reader of fiction. She enjoys exploring immersive worlds through games and books, with a particular interest in stories that offer new perspectives, ideas, and experiences.
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