Liquid Network says $320 million in bitcoin drained by white-hat hackers, halts transactions

Liquid Network, a blockchain built to speed up Bitcoin transactions, said in a post on X that roughly 4,000 of the 4,200 Bitcoin held in its Liquid Federation wallet were stolen, a theft valued at approximately $320 million. The platform described the perpetrators as purported white-hat hackers, actors who typically exploit security flaws and later return the funds, often in exchange for a fee.

"Liquid wallets will be impacted, and we’re sorry for any inconvenience," Liquid Network said. "Federation members are actively working on resolving this so we can restore normal network activity."

The platform said it has paused all new transactions and disabled its bridge nodes, preventing any transfers from being submitted to the network. "Bridge nodes have been temporarily disabled, so no new transactions can be submitted to the network. Effectively, the Liquid sidechain is paused until this issue is resolved," Liquid Network stated. The company also said it has notified partner exchanges, which have suspended deposits of Liquid Bitcoin, a token pegged one-to-one to Bitcoin that is native to the platform.

According to Liquid Network, the stolen funds were moved through SideSwap, a settlement platform authorized to process transfers on the network, and the federation’s cryptographic key itself was not compromised.

Liquid Network was launched in 2018 by Blockstream, a blockchain technology firm co-founded by cryptographer Adam Back. The network is now overseen by a federation of more than 80 exchanges, infrastructure providers and asset managers. It is designed to help exchanges settle Bitcoin transactions quickly by issuing Liquid Bitcoin against Bitcoin holdings that are locked on the platform, addressing congestion and delays that can occur on the main Bitcoin blockchain. Exchanges that use the Liquid network include BTSE and Bitfinex, which shares a parent company with stablecoin issuer Tether, as well as BitMEX, which has announced plans to cease operations in September. Neither Liquid Network nor Blockstream immediately responded to requests for comment.

The incident follows a string of other recent breaches in the digital-asset sector. Last week, a hacker withdrew $6 million from a crypto lending platform linked to Crypto.com. In August, security researchers raised concerns about the safety of the widely used offline Bitcoin storage device Coldcard after it was targeted in a separate hack.