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Hackers Drain $320 Million From Liquid Network, Then Return Most of It

Hackers exploited an Elements bug to drain about 4,000 BTC (~$320M) from Liquid Network's federation wallet, then returned 3,400 BTC after Blockstream patched.

An attacker drained roughly 4,000 of 4,200 BTC (~$320M) from Bitcoin's Liquid Network federation wallet on September 6 by exploiting a bug in Elements, the open-source code powering the sidechain, which allowed unbacked L-BTC tokens that were redeemed for real Bitcoin through SideSwap's authorized peg-out mechanism. The self-described white-hat attackers negotiated publicly via OP_RETURN on-chain messages, demanding the bridge nodes be patched before returning 3,400 BTC (~$262.6M) and keeping about 598 BTC (~$47M). Blockstream confirmed the affected bridge nodes were patched; the network remains paused while federation members complete security work, and experts debate whether the act legally constitutes extortion.

Security Affairs · 7d agoExploit / PoC in the wild

Liquid Hackers Return 3,400 Bitcoin Taken via Elements Bug, Still Holding $47M in BTC

Hackers exploited an Elements bug to take ~4,000 BTC from Liquid Network, returned 3,400 BTC (~$265M), and still hold ~598.5 BTC (~$47M).

Attackers exploited a bug in Elements, the software behind Blockstream's Liquid Network Bitcoin sidechain, to create L-BTC and withdraw roughly 4,000 BTC (about $320 million) via SideSwap's Peg-out Authorization Key, roughly 95% of Liquid's reported reserves. They returned 3,400 BTC (about $265 million at ~$78,000 per BTC) to the federation address on September 7, keeping about 598.5 BTC (roughly $47 million). The group called itself white hats, demanded node patches before returning funds, and negotiated via on-chain and PGP-encrypted messages; Ledger CTO Charles Guillemet characterized the arrangement as extortion. Blockstream says the peg-out key and other keys were not compromised, updated software is deployed, and the network remains paused pending a coordinated restart.

The Hacker News · 7d agoExploit / PoC in the wild

Hackers drain $320M in Bitcoin from Liquid Network, claim they're the good guys

Attackers withdrew about 4,000 BTC (~$320M) from Liquid Network's federation wallet via a SideSwap peg-out, claiming whitehat status.

Hackers drained roughly $320 million in Bitcoin — about 4,000 BTC, 95% of holdings — from the federation wallet backing Blockstream's Liquid Network sidechain. The withdrawal occurred through SideSwap using its Peg-out Authorization Key (PAK), yet no PAK appears to have been compromised, and the exact mechanism remains under investigation. The actors embedded an on-chain message identifying themselves as whitehats, asked Blockstream to patch federation nodes first, and promised to return most of the funds after fixes are confirmed. Liquid disabled its bridge nodes and asked exchanges to suspend L-BTC deposits and withdrawals; other Liquid assets and the Bitcoin network were unaffected.

The Register · Security · 8d agoExploit / PoC in the wild

Appears with

victim Liquid Network 3product Liquid Network 3vendor Blockstream 3vendor SideSwap 3product Elements 2organization Blockstream 2vendor Bitrue 1victim Blockstream 1vendor Galoy 1vendor Ledger 1vendor Liquid Network 1organization JAN3 1organization SideSwap 1product Bitcoin 1
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