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[TECHNOLOGY] · 59 sources

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Liquid Network recovers 85% of $320M Bitcoin stolen in exploit

The Liquid Network, a Bitcoin sidechain developed by Blockstream, experienced a major security exploit where approximately 4,000 BTC, valued at roughly $320 million, was withdrawn from its federation wallet. The incident, which affected about 95% of the network's reported reserves, was linked to a software bug in Elements, the open-source technology underpinning Liquid.

Following the withdrawal, the network halted new transactions and deactivated bridge nodes. The actors involved left on-chain messages identifying themselves as ‘whitehats’ and stated they would return the funds once the vulnerability was patched and all nodes were updated.

After Blockstream confirmed that the bridge nodes were patched, the purported white-hat hackers returned 3,400 BTC (approximately $270 million) to the Liquid Federation wallet. However, approximately 598.5 BTC, valued at roughly $47 million, remains outstanding. While the funds were moved through SideSwap’s Peg-out Authorization Key (PAK), both Liquid and SideSwap stated that the key itself was not compromised.

Entities

Adam Back · Bitcoin · Blockstream · Elements · Liquid Network · SideSwap

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Sources

5 days ago