Liquid Network pauses after purported white-hat hackers withdraw $320 million in bitcoin

September 7, 2026 at 02:13 AM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Liquid Network paused activity after purported white-hat hackers withdrew about 4,000 bitcoin, worth $320 million, from its federation wallet. Blockstream, the network's technology provider, is working to contact the parties through an onchain signed message. The network said the SideSwap PAK key used in the withdrawal was not compromised.

Key Facts

Liquid Network paused after approximately 4,000 bitcoin, worth about $320 million, were withdrawn from its federation wallet.
Blockstream, the network's technology provider, is working to contact the parties responsible through an onchain signed message.
The funds were withdrawn through the SideSwap PAK, or Peg-out Authorization Key, which Liquid said had not been compromised.
Liquid notified crypto exchanges, which have either suspended deposits and withdrawals for LBTC or would do so.
Other assets issued on Liquid, including USDT, DePix and real-world assets, were unaffected by the security incident.

Security Incident

Liquid Network said Sunday that purported white-hat hackers withdrew approximately 4,000 bitcoin, worth about $320 million, from its federation wallet. In a Sept. 6 post on X, Liquid said Blockstream, the network's technology provider, was working to contact the parties responsible through an onchain signed message. The statement did not identify them or confirm whether the funds would be returned. According to Liquid, the funds were withdrawn through the SideSwap PAK, or Peg-out Authorization Key. The network said that key had not been compromised, nor had any others, but did not explain the root vulnerability that allowed the withdrawal.

Network Response

Liquid said it had notified crypto exchanges which have either suspended deposits and withdrawals for LBTC, Liquid's Bitcoin-backed token, or would do so. Liquid also disabled bridge nodes temporarily, preventing new transactions from being submitted to the network. "Effectively, the Liquid sidechain is paused until this issue is resolved," the statement said. Other assets issued on Liquid, including USDT, DePix and real-world assets, were unaffected by the security incident, according to the network. However, Liquid warned that wallets would be impacted by the disruption.

Liquid Sidechain

Liquid is a Bitcoin sidechain designed for faster, confidential transfers and the issuance of digital assets. BTC locked on the Bitcoin network is represented as LBTC on Liquid, with federation operators responsible for securing the underlying bitcoin. The network said federation members were working to resolve the incident and restore normal activity. Liquid did not disclose when it plans to restart the network or the details of its messages with the purported white-hat hackers.