Liquid Sidechain Halts as $320M in BTC is Withdrawn

Liquid, the Bitcoin sidechain operated by Blockstream, has paused operations due to the withdrawal of approximately $320 million in BTC from its federation wallet. The funds were taken out by individuals claiming to be 'white-hat' hackers, leaving Liquid with a significant shortfall.

The sidechain's bridge activity was halted as a result, with new transactions blocked and existing ones frozen. Exchanges that support L-BTC deposits and withdrawals have also been affected, with some halting these services altogether.

Liquid and Blockstream have been in contact with the individuals behind the withdrawal through signed on-chain messages, requesting that they return the funds and patch a vulnerability in Elements, the open-source software underpinning Liquid. The actors have reportedly provided encrypted technical details to aid in the remediation process.