Crypto Hack: Liquid Network Hackers Agree to Give Most Funds from 4000 Bitcoin Theft

A major crypto hack hit Bitcoin sidechain Liquid Network after roughly 4,000 BTC were withdrawn from its federation wallet on Sept. 6.

Liquid said the withdrawn Bitcoin was worth approximately $320 million at the time of the incident. The amount represented about 95% of the roughly 4,200 BTC held in the affected federation wallet.

The network halted new transactions while Blockstream and federation members investigated the security failure. The actors later identified themselves onchain as white hats and offered to return most of the Bitcoin after the vulnerability is patched.

Bitcoin itself remained around $80,000 after the incident. The muted reaction suggests traders have so far treated the exploit as a Liquid-specific security problem rather than a compromise of the Bitcoin base network.

Crypto Hack Drains Nearly 4,000 BTC From Liquid Network

In the latest incident of a White-Hat crypto hack, Bitcoin Layer-2 platform Liquid Network lost 4000 Bitcoins, worth a massive $320 million, from its federation wallet. It adds to a series of recent attacks that have raised concerns over digital-asset security.

Liquid Network said roughly 4,000 of the 4,200 Bitcoin held in its Liquid Federation wallet were stolen. The network said the perpetrators are “purported white-hat hackers” who move funds after finding vulnerabilities with the intention of returning them, often for a fee. In a message on the X platform, Liquid Network noted:

“Liquid wallets will be impacted, and we’re sorry for any inconvenience. Federation members are actively working on resolving this so we can restore normal network activity”.

The platform has also taken action by temporarily disabling the Bridges Nodes. As a result, no new transactions will happen on the network. Moreover, they have also paused the Liquid sidechain until the issue is resolved.

Liquid Network said the stolen funds were withdrawn through SideSwap. This is a settlement platform authorized to handle transfers from the network. However, the important thing is that the relevant key was not compromised, as per Liquid Network.

Liquid Network Hackers Agree to Return Funds

Launched in 2018 by BlockStream Corp., Liquid is used by exchanges for faster settlement. The Layer-2 platform addresses slower, more expensive transactions that can occur on the Bitcoin blockchain during periods of network congestion. The network issues Liquid Bitcoin, or L-BTC, against actual Bitcoin that is locked up.

Following the recent crypto hack of 4000 Bitcoins, preliminary evidence points to a bug that allowed minting of L-BTC. This allowed the crypto hackers to drain a massive 95% of the platform’s total BTC.

However, the hackers have said that they are willing to return the funds on certain conditions. Coin Bureau reported that the purported white-hat hacker behind the Liquid Network exploit has indicated plans to return most of the stolen funds.

The hacker drained roughly 95% of Liquid Network’s reserve wallet, worth around $320 million in BTC. While responding to Blockstream onchain, asking: “Sending most back to [federation address], is that ok?”

“Please fix the bug first. The chain is at risk in the latest commit right now. Make sure every node is patched,” the hackers noted.

Crypto Hacks Take A Tall in 2026

The attack follows several recent incidents targeting crypto infrastructure. Last week, an attacker drained $6 million from a Crypto.com-linked digital-asset lending platform. In August, a hack involving the Coldcard offline Bitcoin wallet also raised concerns about the security of digital-asset storage.

Despite the latest incident of Liquid Network, it has had no considerable impact on the Bitcoin price. As of press time, BTC is trading down just 0.5% at $79,455, with a market cap of $1.6 trillion.

This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets can experience sharp price movements.