Bitcoin
Liquid Network Pauses Operations Following 4,000 BTC Security Incident
The Liquid sidechain has halted transactions after roughly 4,000 Bitcoin was removed from its federation wallet in an apparent exploit.
Liquid Network, a Bitcoin sidechain operated by Blockstream, suffered a major security breach resulting in the unauthorized transfer of nearly 4,000 Bitcoin valued at approximately $319 million. On-chain records show the balance of the network's federation wallet declined from 4,200 BTC to 207.275 BTC.
The entity responsible for the transaction included an unverified on-chain message identifying themselves as white-hat hackers and requesting direct communication. Analysts noted that the extracted assets remained unmixed in Bitcoin addresses, which aligns with non-hostile extraction behavior, though the failure of sidechain safeguards raised operational concerns.
In response, Liquid disabled bridge nodes and instructed exchanges to pause deposits and withdrawals of LBTC. SideSwap, the platform involved in routing the transaction, stated that its authorization keys remained secure. Blockstream later identified that the transferred LBTC was generated through a vulnerability within the Elements software, while team representatives confirmed that remediation efforts are underway.
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