Liquid Network Hack: 4,000 Bitcoin Stolen Due to Bug in Open-Source Code

A significant security incident occurred on September 6, 2026, when approximately 4,000 Bitcoin (BTC) worth around $320 million was drained from Blockstream's Liquid Network federation wallet. The attack exploited a bug in Elements, the open-source code Liquid runs on, allowing attackers to mint unbacked L-BTC tokens and redeem them through the normal process.

The attackers, who claim to be 'whitehats,' attached a message to the transaction saying they wanted to return the funds once the vulnerability was patched. Blockstream responded by sending 1,000 satoshis to the attackers' address with a message pointing to its security contact.

Although most of the stolen Bitcoin has been recovered, with around 3,400 BTC returned to the federation's address, about 598.5 BTC remains with the attackers. The incident highlights the importance of robust security measures and the need for Blockstream to provide clear figures showing that the L-BTC supply matches the Bitcoin held in reserve.

The Liquid Network has been paused, and exchanges have suspended L-BTC deposits and withdrawals. However, the Bitcoin base layer remains unaffected, with its price trading around $79,700-$80,000 at the time of the incident.