Liquid Sidechain Pauses as 'White Hats' Withdraw $320M in BTC
Liquid's sidechain was paused on Sunday after actors claiming to be 'white hat' hackers withdrew approximately $320 million in Bitcoin from its federation wallet.
The withdrawal represents about 95% of the wallet's balance, which consisted of around 4,200 BTC before the incident. The L-BTC used in the transaction originated from a bug in Elements, the open-source software underpinning Liquid, rather than SideSwap's systems.
Liquid said that bridge nodes were disabled, preventing new transactions, while exchanges had halted or were preparing to halt L-BTC deposits and withdrawals. Blockstream, Liquid’s technology provider, started contacting the actors through signed onchain messages, requesting them to return most of the Bitcoin after they patched the vulnerability and ensured every node was updated.