Blockstream Liquid Network Halts After $320M Bitcoin Drain — SkimNews
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- Blockstream's Liquid Network halted transactions after attackers withdrew ~4,000 of the 4,200 bitcoin (~$320M) held in its federation wallet, effectively emptying the sidechain's reserves.
- The attackers publicly identified as "white-hat hackers" or "the good guys," claiming the exploit was meant to expose a vulnerability rather than steal funds.
- The Block reported the attacker said they will return most of the 4,000 BTC after the underlying bug is fixed.
- CryptoSlate suggested tokens may have been "created out of thin air" to facilitate the withdrawal, indicating a minting or accounting flaw rather than a private-key compromise.
- Coverage split across crypto outlets (CoinDesk, Decrypt, CryptoSlate, The Block) and mainstream wires (Reuters, Bloomberg), with skeptical publications putting "white-hat" in quotes while Reuters and Bloomberg labeled it a "hack."
Why it matters: The drain took roughly 95% of the federation wallet's reserves, exposing a Bitcoin settlement layer used by major crypto exchanges to downtime and counterparty risk. Fund recovery hinges entirely on the attackers honoring their promise to return the BTC, leaving exchanges exposed to days or weeks of uncertainty while the sidechain remains paused.
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