Bitcoin
Blockstream Liquid Network Pauses Redemptions After 4,000 Bitcoin Are Drained
The sidechain suspended operations after 95% of the federation wallet's reserves were removed by actors claiming to be white hats.
Approximately 4,000 Bitcoin, valued at around $320 million, were drained from the Liquid Network federation wallet on September 6, 2026. The drained amount accounted for roughly 95% of the 4,200 BTC backing the sidechain's L-BTC tokens, leaving the wallet with reduced reserves.
Following the transaction, Blockstream halted the network and paused redemptions, temporarily preventing L-BTC holders from converting their tokens into underlying Bitcoin. Base-layer Bitcoin holders were unaffected by the incident, as their funds are not held within the sidechain's multi-signature federation wallet.
Blockstream confirmed that no private keys were compromised during the transfer, which occurred via federation member SideSwap. The individuals responsible attached an on-chain message stating they were white hats offering to return the funds, prompting subsequent on-chain communication from Blockstream.
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