● Covered by 5 sources · 5 reportsMedium impact1 negative4 neutralDeveloping
Liquid Network loses $320 million in Bitcoin to purported white-hat hackers
Key points
- 4,000 BTC ($320 million) drained from Liquid Network's federation wallet.
- Attackers claim to be white-hat hackers and promise to return funds after vulnerability fix.
- Liquid Network has suspended transactions and is communicating with the attackers.
- The funds exited via a Peg-out Authorization Key (PAK) without key compromise.
- The stolen amount was approximately $340 million.
- Blockstream fixed the vulnerability.
- 3,400 BTC were returned.
- Approximately 600 BTC ($47 million) remain under the hacker's control.
- Liquid Network was launched in 2018 by Blockstream.
- Samson Mow, a former Blockstream executive, confirmed the bug fix and return of funds.
- The theft occurred on Sunday, September 6.
- The 3,400 BTC were returned on September 7 at 16:09 UTC.
- The remaining 598.5 BTC were part of the same transaction as the returned funds.
- The withdrawal took approximately 95% of Liquid's reported bitcoin reserves.
- Liquid Network held approximately 4,200 Bitcoin before the attack.
- The hackers communicated with Liquid Network on the blockchain.
- The hackers demanded Blockstream fix the bug before returning funds.
Significant Bitcoin Drain from Liquid Network
The Liquid Network, a Bitcoin sidechain developed by Blockstream, reported that 4,000 BTC, valued at approximately $320 million, was withdrawn from its federation wallet. This amount represents about 95% of the wallet's total balance.
White-Hat Claims and Conditions for Return
The individuals responsible for the withdrawal identified themselves as "whitehats" in a message embedded in a Bitcoin transaction. They requested that Liquid fix a vulnerability, stating, "Please fix the bug first. The chain is under risk at latest commit right now. Make sure every node is patched. Then we will transfer the money back safely after confirming the fix."
Network Response and Communication
Liquid confirmed the incident and has suspended transactions, warning of service disruptions as federation members work to restore service. The network responded on-chain with security team contact information and has reportedly moved communications with the purported white-hat hackers to an encrypted channel.
Mechanism of the Exploit
The funds were moved through the Peg-out Authorization Key (PAK) belonging to SideSwap, a decentralized exchange built on the Liquid sidechain. Both Liquid and SideSwap stated that no keys were compromised. SideSwap reported that a customer sent 4,000 L-BTC to its peg-out service, which then processed the transaction.
About Liquid Network
Launched in 2018, Liquid is designed to facilitate faster and more private Bitcoin transactions than the main chain. It operates as a federated sidechain where users lock BTC to receive L-BTC. The network is secured by a federation of over 80 financial firms, with block signing and multisig wallet operations requiring 11 out of 15 rotating functionary signatures to move funds.
Updates
- Liquid Network held approximately 4,200 Bitcoin before the attack.
- The hackers communicated with Liquid Network on the blockchain.
- The hackers demanded Blockstream fix the bug before returning funds.
- The stolen amount was approximately $340 million.
- Blockstream fixed the vulnerability.
- 3,400 BTC were returned.
- Approximately 600 BTC ($47 million) remain under the hacker's control.
- Liquid Network was launched in 2018 by Blockstream.
- Samson Mow, a former Blockstream executive, confirmed the bug fix and return of funds.
- The theft occurred on Sunday, September 6.
- The 3,400 BTC were returned on September 7 at 16:09 UTC.
- The remaining 598.5 BTC were part of the same transaction as the returned funds.
- The withdrawal took approximately 95% of Liquid's reported bitcoin reserves.
✨ This summary was generated by AI from the outlets' reporting listed below. It is not independently verified and may contain errors — check the original sources. How BrevFeed works →
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Primary sources
GitHub Sjors/9d24363e67529079cc2ae4305ff90fcdHow outlets covered it
Hackers stole $320 million from the Liquid Network, then returned $266.5 million, keeping $47 million as a "reward" for identifying a vulnerability. The incident involved public negotiations on the blockchain between the hackers and Liquid Network's operator, Blockstream, which subsequently deployed updated software.
The Liquid Network, a Bitcoin sidechain, recovered 3,400 Bitcoin worth approximately $263 million after a weekend hack. Alleged 'white-hat' hackers returned most of the stolen funds, stating they would return the rest once the vulnerability is fixed, leaving 598 Bitcoin outstanding.
Hackers who exploited a bug in the Elements software on the Liquid Network returned 3,400 of the nearly 4,000 bitcoin taken, while retaining 598.5 bitcoin worth approximately $47 million. The incident highlights vulnerabilities in sidechain technology and the complexities of recovering stolen digital assets, impacting the stability and trust in the Liquid Network.
A hacker stole approximately $340 million worth of Bitcoin from Liquid Network by exploiting a bug. The hacker returned about 3,400 of the 4,000 stolen bitcoins after Blockstream fixed the vulnerability, but retained around 600 bitcoins.
The Liquid Network, a Bitcoin sidechain, had approximately $320 million (4,000 BTC) drained from its federation wallet by individuals claiming to be white-hat hackers. These individuals state they will return the funds once a vulnerability is fixed, prompting Liquid to suspend transactions and engage with them.