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.
- ~95% of the L-BTC collateral pool drained in one transaction
- Attackers exploited an Elements bug, not stolen keys
- Funds moved via SideSwap's authorized peg-out mechanism
- Negotiation conducted on-chain through OP_RETURN messages
- Network remains paused; trust in L-BTC backing damaged
- Victims
- Liquid Network
- Organizations
- BlockstreamSideSwap
From the original article
3 min read at securityaffairs.com
Crypto exchange network Liquid Network lost $320 million overnight, then got most of it back after the hackers demanded a bug fix instead of a ransom Bitcoin’s Liquid Network, a sidechain built by Blockstream and used by dozens of exchanges to move funds faster and more privately than the main Bitcoin blockchain allows, got drained […]
By Pierluigi Paganini · securityaffairs.com
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