The Bitcoin sidechain Liquid Network encountered a security incident over the weekend, with approximately 4,000 BTC coins being transferred out, which is about 95% of its reserves according to the report. After the vulnerability was fixed, the attackers returned about 3,400 BTC coins, but there are still around 598.5 BTC coins whose whereabouts are unknown. The market's focus has now shifted to whether L-BTC will be affected by this shortfall in reserves.
Approximately 3,400 BTC have been returned.
Reports indicate that the attacker claimed to be a "white hat" and stated that they exploited a software vulnerability to create L-BTC that did not have sufficient support, and then exchanged it for real Bitcoin. Subsequently, the attacker demanded that the developer Blockstream deploy a patch and complete the update before discussing the return of the funds.
After the vulnerability was fixed, approximately 3,400 BTC were transferred back to the multi-signature wallet of Liquid Federation. Based on the original data, the amount not returned is about 598.5 BTC. Currently, neither the attacker nor Blockstream has made any further statements regarding the handling of this portion of assets.
Bridge node has paused operation.
After the incident occurred, Blockstream and the federal members shut down the bridging nodes, effectively freezing the entire peg-out redemption process. Subsequently, multiple platforms took follow-up actions to limit the further spread of risks.
- Bitfinex has suspended L-BTC related deposits and withdrawals.
- Aqua Wallet has also suspended related services.
- The network is still being managed and handled by the federal members.
L-BTC Facing Detachment Pressure
Liquid Network operates on the basis of a 1:1 support relationship with L-BTC. If this gap cannot be filled in the end, L-BTC may experience discounted trading compared to BTC, which could then affect users' expectations for redemption and the liquidity on the chain.
The report mentioned that USDT issued on Liquid and some real-world asset tokens were not directly affected by this incident. However, as long as the reserve gap remains unresolved, the market's confidence in L-BTC will not be fully restored, and the suspension measures of related platforms may also continue for some time.
As of press time, the co-founder Blockstream and CEO Adam Back have not made any public comments on this matter. The most recent statement from Liquid Network indicated that federal members are still working on resolving the issue.
