Liquid Network hit by security incident; 4,000 BTC taken from federation wallet, sidechain paused
AI Market Summary
Liquid Network suffered a major security incident in which ~4,000 BTC (~$320m) was removed from the Federation wallet, representing most of its reported reserves. The sidechain is halted and major venues have paused LBTC transfers, creating immediate liquidity and settlement risk for users and counterparties. Even if described as a "white hat" action, the scale and operational disruption are likely to weigh on crypto risk sentiment and sidechain trust.
Impact level
● High
Affected assets
BTC/USDT-0.14%
AI Insight · BTC/USDTAI Insight
▼ Bearish
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PANews reported on September 7 that Liquid Network suffered a security incident in which roughly 4,000 bitcoins—about $320 million at current prices—were withdrawn from the network's Federation wallet by a self-described "white hat" hacker. The amount is equivalent to about 95% of Liquid's disclosed bitcoin reserves. Prior to the incident, Liquid reported reserves of around 4,200 BTC.
Liquid has paused the sidechain, and major exchanges have suspended deposits and withdrawals of LBTC. Blockstream, Liquid's technology provider, said it is working to contact relevant parties.
Liquid said the funds were withdrawn using the SideSwap PAK (Pegout Authorization Key). The network added that the PAK and other keys were not compromised.
