Liquid Network Hacked: $319M in Bitcoin Withdrawn
A significant amount of Bitcoin has been withdrawn from Liquid Network, a sidechain run by Blockstream. Approximately $319 million worth of BTC was taken out, with 3,998.5 coins removed from the federation wallet.
The incident occurred via the SideSwap PAK (Peg-out Authorization Key), but according to Liquid Network, the key was not compromised and no other keys were affected. The team has paused bridge nodes to prevent further transactions until the issue is resolved.
Crypto analyst DBCrypto noted that the coins have not been mixed or used for nefarious purposes, which could indicate a 'whitehat' extraction rather than a theft. However, this raises questions about security on the sidechain and how the funds were withdrawn without authorization from 11 of 15 multisig signatories.