Liquid Hackers Return Most Stolen Bitcoin After Blockstream Patch
A major security incident occurred on the Liquid network when hackers stole $320 million in Bitcoin. The attackers, described as 'purported white-hat hackers,' claimed they stole the funds to demonstrate a vulnerability in Liquid's infrastructure and to help the company.
The hack used a bug in the Elements software that Liquid is built on, allowing the creation of new LBTC tokens without any authorization. SideSwap, a third-party trading app, was involved in the transaction but denied its PAK or systems were compromised. The hackers returned 3,400 BTC after Blockstream patched the bug and confirmed it was safe to do so.
The incident highlights the risks associated with Bitcoin sidechains, which carry different security risks compared to base-layer blockchains like Bitcoin. Liquid's network is currently paused while the company works on resolving the issue and preparing for a safe restart.