$320M Bitcoin Heist Rocks Liquid Network

A significant security incident occurred on the Liquid Network in September 2026, resulting in the loss of approximately $320 million in Bitcoin. The attack involved the withdrawal of about 4,000 BTC from Liquid's federation-controlled reserves through SideSwap's peg-out service.

Liquid Network initially stated that the withdrawal was made via SideSwap's Peg-out Authorization Key (PAK), but denied that the PAK or other federation keys were compromised. The funds were found to be in Liquid's federation-controlled reserves, which are not dependent on Bitcoin base-layer consensus and network.

Blockstream later discovered that the L-BTC involved was created by a bug in the Elements software, rather than a vulnerability in Bitcoin itself. SideSwap stated that its systems and authorization key had not been compromised, and that its services correctly processed the 4,000 L-BTC request.