$320 Million in BTC Stolen from Liquid Network, White-Hat Hackers Promise Return After Fix

A security incident has occurred on Liquid Network, a Bitcoin Layer 2 network. Approximately $320 million worth of BTC was withdrawn from the Liquid Federation wallet by individuals claiming to be white-hat hackers.

The funds were taken using the SideSwap PAK (Peg-out Authorization Key) but, according to Liquid, the key itself was not compromised and no other keys are in jeopardy. Crypto exchanges have suspended or are preparing to suspend LBTC deposits and withdrawals.

Liquid has temporarily disabled its bridge nodes, effectively pausing new transactions on the sidechain while the issue is addressed. The network stated that other assets on the network, including USDT, DePix, and real-world assets, were not affected.

The public back-and-forth between Blockstream and the party claiming to be the white-hat hacker continues on-chain. According to Samson Mow, the hacker prefers communicating publicly rather than via email, posting messages via Bitcoin transaction data.