Bitcoin
Liquid Network bridge paused after 3,996 Bitcoin transferred from federation wallet
Bridge nodes were disabled and exchange services suspended after nearly all Bitcoin reserves moved out of the Liquid Network peg wallet.
Liquid Network, a Layer-2 sidechain settlement network, faced a severe liquidity disruption after approximately 3,996 BTC left its Federation peg wallet in a single transaction. The transfer drained about 95% of the wallet's 4,207 BTC balance, leaving just 197 BTC in reserves.
The funds were moved to an address attached to a white-hat message, indicating a potential for recovery. In response, operators disabled bridge nodes to halt the network and prevent new transactions, while cryptocurrency exchanges paused deposits and withdrawals for Liquid Bitcoin (LBTC). Assets other than Bitcoin on the network were not affected.
Liquid noted on X that neither the Federation keys nor the SideSwap PAK used for withdrawals were compromised, though the authorization path used for the transfer remains unresolved. While circulating LBTC stands near 197 BTC, matching the remaining reserve balance and preventing immediate insolvency, exchange halts and disabled bridge infrastructure have locked access to the underlying backing. SideSwap has also suspended swap, peg-in, and peg-out operations.
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