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Nearly 4,000 <a href="https://www.thestreet.com/crypto/markets/satoshi-era-bitcoin-wallet-tied-to-293b-lawsuit-moves-3m-after-15-years” rel=”nofollow noopener” target=”_blank”>Bitcoin, valued at about $320 million, was withdrawn from the Liquid Federation wallet in a security incident that forced the Bitcoin sidechain to halt bridge activity.
The Liquid Network shared in a post on X, saying, “We are aware of a security incident on Liquid_BTC. Purported white-hat hackers have withdrawn ~4,000 BTC (~$320 million) from the Liquid Federation wallet.”
“Exchanges have been notified and have already paused (or will pause) LBTC deposits and withdrawals. Other Liquid assets such as USDT, DePix, and RWAs are unaffected by this security incident,” the network shared.
The unidentified actors have claimed to be white-hat hackers and said they may return “most” of the funds once a vulnerability is fixed.
Liquid pauses network activity
Liquid Network said the funds were withdrawn through the SideSwap Peg-out Authorization Key mechanism, while stressing that the key itself, and other keys, had not been compromised. Bridge nodes were disabled, preventing new transactions from being submitted to the network.
The network also said exchanges had been notified and were pausing, or preparing to pause, LBTC deposits and withdrawals. Other assets issued on Liquid, including USDT, DePix and real-world assets, were not affected, according to the project’s initial update.
“What we know so far is that the funds were withdrawn, but that key was not compromised, nor were any others,” the network mentioned
On-chain messages emerge
The wallet holding the withdrawn Bitcoin reportedly included an on-chain message declaring, “we are whitehats. contact us on chain.”
Blockstream’s team then attempted to establish communication through Bitcoin transactions carrying OP_RETURN messages and encrypted material.
According to Galaxy Research head Alex Thorn’s reconstruction of the exchange on X, the alleged hackers later sent a message asking whether returning “most” of the Bitcoin to the federation address would be acceptable.
Their condition was clear: the underlying bug must be addressed first.
Return remains uncertain
The word “most” leaves a significant unanswered question over the final amount that could be returned. Liquid has so far referred to the actors only as “purported” white-hat hackers, underlining that no recovery commitment has been independently verified.
The incident has revived concerns around sidechain bridges and the security assumptions behind pegged Bitcoin systems.
Source: <a href="https://finance.yahoo.com/markets/crypto/articles/nearly-4-000-btc-vanishes-175109117.html” target=”_blank” rel=”nofollow noopener”>finance.yahoo.com