Liquid Network loses $320 million in recent hack

Launched in 2018 by Blockstream Corp., Liquid Network was co-founded by Adam Back, a prominent cryptographer and Bitcoin advocate.
| Photo Credit:
Dado Ruvic

A major security breach has struck Liquid Network, a Bitcoin-linked blockchain utilized by numerous cryptocurrency exchanges, resulting in the theft of approximately $320 million. This incident adds to a growing series of digital asset thefts that continue to undermine trust in blockchain security.

Key Takeaways

• Bitcoin-linked blockchain Liquid Network lost about $320 million in a security breach, with roughly 4,000 of 4,200 BTC drained from its Federation wallet.
• Liquid Network, launched in 2018 by Blockstream and co-founded by Adam Back, said the attackers appear to be ‘white-hat hackers.’
• Blockstream is working to contact the hackers on-chain, as such actors often return funds for a bounty.
• The incident adds to a growing string of blockchain security breaches undermining trust in the sector.

In a statement shared on X, Liquid Network revealed that roughly 4,000 of the 4,200 Bitcoins held in its Liquid Federation wallet were drained. The company noted that the perpetrators appear to be “white-hat hackers”—individuals who exploit vulnerabilities with the intent of returning funds, often in exchange for a bounty.

Liquid Network confirmed that user wallets would be affected and announced an immediate halt to all new transactions. “Federation members are actively working on resolving this so we can restore normal network activity,” the company stated, apologizing for the disruption.

This heist follows a troubling trend of recent crypto exploits. Just last week, a lending platform linked to Crypto.com lost $6 million, and in August, a breach involving the Coldcard offline Bitcoin wallet sparked widespread debate regarding secure asset storage.

Founded in 2018 by Blockstream Corp., Liquid Network is currently governed by a federation comprising over 80 entities, including asset managers, infrastructure providers, and various exchanges. While Liquid Network and Blockstream have not yet responded to formal requests for comment, the company clarified on X that the funds were moved through SideSwap, an authorized settlement platform, and emphasized that no private keys were compromised during the event.

The Liquid Network serves as a high-speed alternative to the main Bitcoin blockchain, which often faces delays and high fees during periods of congestion. It achieves this by issuing Liquid Bitcoin (L-BTC) backed by actual Bitcoin held in reserve.

Prominent exchanges such as Bitfinex and BTSE utilize the network. BitMEX, which is scheduled to cease operations later this month, was also a participant.

Aneirin Flynn, CEO of cybersecurity firm FailSafe, suggested that early evidence indicates a technical bug may have allowed for the unauthorized minting of L-BTC. Flynn remarked that the breach highlights a “critical weakness” in the network’s validation and backing architecture, especially given that nearly 95 percent of the reserves were depleted during the attack.

Published on September 7, 2026