Bitcoin hack drains US$320mil from crypto network

LONDON:
A blockchain used by several cryptocurrency exchanges to move Bitcoin has been hacked for US$320 million, the latest in a spate of breaches to shake confidence in digital-asset security.

Roughly 4,000 of the 4,200 Bitcoin held in a wallet used by Liquid Network were taken, the platform operator said in a post on X. It said the perpetrators appear to be “white-hat hackers” who exploit security flaws and typically return the funds, sometimes in exchange for a fee.

“Liquid wallets will be impacted, and we’re sorry for any inconvenience,” Liquid Network wrote, adding it has halted all new transactions. “Federation members are actively working on resolving this so we can restore normal network activity.”

Alex Thorn, head of research at crypto firm Galaxy Digital Inc, said in a post on X late Monday London time that the hackers had returned 3,400 Bitcoin, apparently keeping some US$47 million worth for themselves.

The hack is the latest in a string of recent attacks that have put crypto cybersecurity in the spotlight. Just last week, an attacker drained US$6 million from a Crypto.com-linked digital-asset lending platform. In August, a hack of the popular offline Bitcoin wallet Coldcard raised questions about the safest way to store the digital asset.

“While these events may understandably shake consumer confidence, they highlight where critical infrastructure safeguards need to be strengthened, and why comprehensive security across the full stack is essential for operators,” said Ziqing Ang, head of policy in Asia-Pacific at TRM Labs.

Liquid Network was started in 2018 by Blockstream Corp, a blockchain technology company co-founded by cryptographer-turned-Bitcoin enthusiast Adam Back. It is now managed by a federation of more than 80 exchanges, infrastructure companies and asset managers Liquid Network and Blockstream did not respond to emailed requests for comment

In its post on X, Liquid Network said the funds were withdrawnrs from the network, but that the key was not compromised

In the hours after Liquid Network posted about the hack, messages appearing to be between the hackers and Blockstream showed up embedded in small Bitcoin transactions, according to data on the blockchain tracker Mempool. The hackers said they would return the funds after confirming the vulnerability had been fixed.

Liquid operates as a so-called sidechain, a separate network used by exchanges for quick settlement because the main Bitcoin blockchain can often suffer from slow and expensive transactions due to network congestion. Liquid Network speeds this up by issuing Liquid Bitcoin, or L-BTC, against actual Bitcoin, which it locks up.

Blockstream lists several major exchanges as users of Liquid, including BTSE and Bitfinex, which shares the same parent company as Tether, the world’s largest stablecoin issuer. BitMEX, which has announced that it is shutting down this month, was also a user.

Aneirin Flynn, chief executive of cybersecurity technology firm FailSafe, said preliminary evidence points to a bug allowing the minting of L-BTC.

The breach “is the latest in a spate of attacks exposing weaknesses in crypto infrastructure this year,” Flynn said.

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Source: www.freemalaysiatoday.com