Liquid Network Hit by $320M Bitcoin Security Incident as 4,000 BTC Leaves Federation Wallet

• 4,000 BTC was withdrawn from Liquid’s Federation wallet via the SideSwap PAK, while Liquid said the authorisation key itself was not compromised.
• Liquid disabled bridge nodes and paused the sidechain, while exchanges were notified to halt LBTC deposits and withdrawals as the investigation continues.

Liquid Network confirmed a security incident after purported white-hat hackers withdrew about 4,000 Bitcoin, worth around $320 million, from the Liquid Federation wallet. The withdrawal was executed via the SideSwap PAK (Peg-out Authorisation Key), though Liquid confirmed the key itself was not compromised, nor were any others. 

The federation wallet held more than 4,200 BTC before the withdrawal. Bridge nodes were immediately disabled, and the Liquid sidechain was paused, effectively freezing the network until the issue is resolved. Exchanges were notified and moved to pause LBTC deposits and withdrawals. 

Moreover, other assets on the network, including USDT, DePix, and RWAs, remain unaffected.

The Negotiation Nobody Expected

After consolidating the funds, the attacker left an on-chain message that changed the entire tone of the incident. It stated that they are white hats and to contact them on-chain.