White Hat Hackers' Bitcoin Heist Exposes Liquid Network Vulnerability
A group of self-proclaimed white hat hackers exploited a software vulnerability in the Liquid Network to steal around 4,000 BTC, worth approximately $263 million. The attackers claimed their intention was to highlight a serious security flaw and force its administrators to fix it.
The issue allowed the creation of unbacked LBTC tokens, which are used to represent Bitcoin within the network. The hackers exploited this error to generate 4,000 unbacked LBTC tokens and then withdrew authentic BTC from Liquid's reserve without obtaining the wallet's private keys or breaching the withdrawal authorization system.
Liquid reacted by halting the network and suspending operations with LBTC while its administrators investigated the incident and applied necessary corrections. The attackers have returned 3,400 BTC worth approximately $263 million, but still hold about 598 BTC worth around $47 million.