Bitcoin $BTC$79,647.57 worth millions of dollars were withdrawn from a settlement network used by cryptocurrency exchanges, marking the latest in a string of security breaches that have plagued the market this year.
Liquid Network, launched in 2018 by Blockstream, said purported “white-hat hackers,” removed roughly 4,000 of the 4,200 bitcoin held in its federation wallet. The network is overseen by a federation of more than 80 exchanges, infrastructure firms and asset managers.
“Liquid wallets will be impacted, and we’re sorry for any inconvenience,” Liquid Network said on X, halting all new transactions. “Federation members are actively working on resolving this so we can restore normal network activity.”
The sidechain halted new transactions and warned that wallets would be disrupted while federation members work to restore service. The episode matters because Liquid was built to solve a practical problem for exchanges, mainly the slow speed of the Bitcoin blockchain. To solve that, the network issues L-$BTC against bitcoin locked in reserve so trades can settle faster. A drain of nearly the entire reserve raises doubts about the security of that model.