Liquid Sidechain Grinds to Halt Amid Multi-Million-Dollar BTC Withdrawal
Liquid's Bitcoin sidechain has halted operations after actors claiming to be 'white-hat' hackers withdrew approximately $320 million in BTC from its federation wallet. The incident has triggered a wider shutdown of bridge activity, with new transactions currently blocked.
The withdrawal of around 4,000 BTC, representing about 95% of the wallet's balance at the time, was reportedly taken after actors contacted Liquid through signed on-chain messages demanding that Blockstream, its technology provider, patch the vulnerability and ensure every node is updated before they return most of the Bitcoin.
Liquid has disabled bridge nodes to prevent further transactions while it works through the situation. Exchanges have halted or are in the process of halting L-BTC deposits and withdrawals to reduce the risk of users interacting with a malfunctioning bridge.