Liquid Network loses $320 million in Bitcoin following security breach; sidechain halted

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On September 7, 2026, the Liquid Network suffered a security breach after a white-hat hacker stole 4,000 BTC ($320 million) from its Federation wallet. The incident depleted nearly 95% of its 4,200 BTC reserves. Liquid has halted its sidechain and paused LBTC deposits and withdrawals. Blockstream is working to contact the hacker. The funds were withdrawn via a SideSwap PAK, and Liquid confirmed that no private keys were compromised. A network upgrade is being considered to prevent future incidents.

On September 7, PANews reported a security incident on the Liquid Network, during which approximately 4,000 bitcoins (currently valued at around $320 million) were stolen from its Federation wallet by a "white hat" hacker. This theft represents about 95% of Liquid’s reported bitcoin reserves; prior to the incident, Liquid’s bitcoin reserves totaled approximately 4,200 BTC. The Liquid sidechain has been suspended, and major exchanges have halted deposits and withdrawals of LBTC. Blockstream, the network’s technology provider, is working to contact the relevant parties. According to Liquid, the funds were withdrawn using the SideSwap PAK (Peg-out Authorization Key). The network stated that this key, along with all other keys, was not compromised.

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