Bitcoin-based payments and settlement platform Liquid Network has suffered a major security breach in which about $320 million worth of Bitcoin was withdrawn from its federation wallet.
The network said approximately 4,000 of the 4,200 Bitcoin held in the wallet were taken during the incident, representing about 95 per cent of the wallet’s holdings.
Liquid Network disclosed the breach in a post on X, describing the attackers as “purported white-hat hackers” and announcing the suspension of new transactions as it works to resolve the incident.
The network said, “Liquid wallets will be impacted, and we’re sorry for any inconvenience,” while adding that federation members were working to restore normal network activity.
According to the report, the funds were withdrawn through SideSwap, a settlement platform authorised to facilitate withdrawals from the Liquid Network. However, Liquid said the cryptographic key used in the transactions was not compromised, raising questions about how the attackers were able to initiate the withdrawals.
The incident has renewed concerns over vulnerabilities in cryptocurrency infrastructure, particularly platforms responsible for holding large reserves of digital assets.
Liquid Network is a Bitcoin-linked blockchain designed to facilitate faster transactions and settlements. It is managed by a federation comprising exchanges, infrastructure companies and asset managers.
The latest breach adds to a series of attacks targeting cryptocurrency platforms this year. A recent attack on a crypto-linked lending platform reportedly resulted in the loss of about $6 million. At the same time, other incidents have highlighted continuing security challenges around the storage and movement of digital assets.
The Liquid Network hack is particularly significant because of the scale of the funds affected and the fact that the network has temporarily halted new transactions.
With nearly the entire Bitcoin balance of its federation wallet withdrawn, the incident could intensify scrutiny of the governance, validation and reserve-management arrangements underpinning blockchain networks.
However, the network has not indicated when normal transaction activity will resume, but said federation members were actively working on resolving the situation, with the development also highlighting an ongoing problem for the crypto world. Even as blockchain technology is promoted for its security and transparency, vulnerabilities in wallets, settlement mechanisms and other supporting infrastructure can expose billions of dollars in digital assets to theft.
For investors and regulators, the incident is likely to reinforce calls for stronger controls around custody, transaction authorisation and real-time monitoring of crypto assets.
Meanwhile, the affected Bitcoin was reportedly moved through SideSwap, with Liquid maintaining that the key used in the process had not been compromised, as the precise method through which the attackers gained access remains unclear.
