Liquid Network Pauses After $320 Million Withdrawal by Claimed White Hat Hackers
The Liquid network halted all transactions after actors claiming to be white hat hackers withdrew 4,000 bitcoin worth $320 million. The company has disabled bridge nodes while attempting to resolve a software vulnerability in the underlying Elements protocol.
Liquid Network, a Bitcoin-based settlement layer used by exchanges, paused operations on Sunday following an unauthorized withdrawal of approximately 4,000 bitcoin valued at $320 million. Actors claiming to be white hat hackers transferred these funds using SideSwap's Peg-out service. Liquid stated the key used for the transaction was not compromised and the incident resulted from a bug in Elements, the open-source software underlying the Liquid blockchain, rather than a flaw in SideSwap's systems. Approximately 95% of the federation wallet's pre-incident balance remains withdrawn. Bridge nodes were disabled to prevent new transactions, and exchanges either halted or prepared to halt deposits and withdrawals involving L-BTC. Blockstream, the technology provider for Liquid, contacted the actors via signed on-chain messages demanding patches and full node updates before returning the assets. These parties reportedly sent encrypted technical details to resolve the vulnerability but have not yet returned most of the bitcoin. At this time, the funds remained unrecovered.
