Liquid Peg Drained of Nearly 4,000 BTC in Mysterious Transfer

Nearly 4,000 BTC was drained from Blockstream's Liquid peg after an unexpected transfer left federation holdings at just 207.275 BTC, a significant drop from the roughly 4,200 BTC that had backed the network.

Onchain researcher Ergo BTC flagged two linked Bitcoin transactions, including a large Liquid peg-out described as roughly 4,000 BTC leaving a pool of about 4,200 BTC.

The move is drawing attention because Liquid's peg-out system is not designed to let anyone simply pull bitcoin from the sidechain. Normally, LBTC is destroyed on Liquid before federation functionaries process the corresponding bitcoin withdrawal.

A follow-up transaction spent approximately 3,998.5 BTC and included a 'whitehats' message. The concentration of the bitcoin remains on the Bitcoin blockchain and has not been mixed at the time of writing.