Cardano
Cardano Founder Cites Liquid Network Security Incident in Warning Over AI Exploits
Charles Hoskinson highlighted the recent 4,000 Bitcoin transfer from the Liquid federation to warn about growing software vulnerabilities in the era of artificial intelligence.
Cardano founder Charles Hoskinson has responded to a major security event on the Liquid Network involving the withdrawal of roughly 4,000 Bitcoin, valued at approximately $320 million, from the sidechain's federation wallet. Following the transfer, Liquid disabled bridge nodes and suspended operations while federation members opened an inquiry.
The funds moved through SideSwap's Peg-out Authorization Key service. Both Liquid and SideSwap stated that the authorization key itself was not breached, with SideSwap linking the issue to a vulnerability in Elements, the underlying Bitcoin-based software supporting Liquid. While the transaction included an on-chain note from the actors claiming to be white hats and requesting contact, Liquid has continued to treat the event as an unauthorized movement of federation-held assets.
Hoskinson used the breach to highlight broader risks surrounding artificial intelligence in cybersecurity. He argued that traditional testing methodologies may struggle as automated AI tools become more proficient at discovering code weaknesses, advocating for the adoption of formal methods to strengthen protocol security.
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