Liquid Hackers Return 3,400 Bitcoin Amid Ongoing Network Pause

A significant development has unfolded on the Liquid Network, a Bitcoin sidechain that facilitates tokenized assets. On September 6, hackers extracted nearly 4,000 BTC from the federation wallet, approximately 95% of Liquid's reported reserves. The value of the stolen funds was estimated at around $320 million.

The following day, September 7, the hackers returned 3,400 BTC to a Liquid Federation address, representing about 85% of what was taken. This return transaction was facilitated via SideSwap's Peg-out Authorization Key, which was not compromised during the incident.

Blockstream, the provider of Liquid's technology, acknowledged that a bug in Elements had created the L-BTC tokens used in the withdrawal. The company has since deployed updated software and is working to restart the network with its federation members coordinating the effort.