Bitcoin sidechain Liquid paused operations after actors claiming to be white-hat hackers withdrew approximately 4,000 BTC worth $320 million from its federation wallet. The actors communicated with Blockstream through signed onchain messages, requesting that the vulnerability in Elements be patched across all nodes before returning most of the Bitcoin. The withdrawn funds represented approximately 95% of the wallet’s balance of around 4,200 BTC, though other assets including USDT, DePix and real-world assets remained unaffected. SideSwap clarified that its Peg-out Authorization Key was not compromised, and the bug originated from Elements rather than its systems. At the time of writing, the funds had not been returned and the sidechain remained paused while federation members worked to fix the vulnerability.
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