Bitcoin
Liquid Network Halts Bridge After 4,000 BTC Exploit Disputed as White-Hat Action
Liquid Network froze bridge operations after roughly 4,000 Bitcoin was drained, with attackers claiming white-hat status while industry executives express skepticism.
Bitcoin layer-2 sidechain Liquid Network halted its bridge nodes after approximately 4,000 Bitcoin, valued at around $320 million, was transferred out of its federation wallet. The drained amount represents roughly 95% of all Bitcoin pegged to the network, according to estimates from Galaxy Research. Other network assets, including USDT and tokenized real-world assets, were unaffected.
The incident occurred when an address submitted 4,000 Liquid Bitcoin (L-BTC) through SideSwap’s peg-out service, receiving 3,996 BTC shortly after. Blockstream traced the root cause to a software flaw within the Elements codebase. The funds were consolidated into a single Bitcoin address with an on-chain message stating the perpetrators were white-hat actors and requesting contact from the Liquid team.
In response, Liquid coordinated with exchanges to suspend L-BTC deposits and withdrawals while working on a network resolution. However, Ledger Chief Technology Officer Charles Guillemet publicly questioned the attacker's white-hat designation, casting doubt on the legitimacy of the on-chain claims.
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