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Liquid Network halts after 4,000 BTC unauthorized peg-out

9/7/2026

9 1 Full Breakdown

Summary

Liquid Halts Transactions

Blockstream’s Liquid Network halted new transactions after white-hat hackers withdrew about 4,000 BTC (~$320 million).
The withdrawal stripped roughly 95% of the federation wallet’s 4,200 BTC, leaving about 200 BTC.
Liquid said the BTC left via SideSwap, whose peg-out authorization key remained uncompromised.
Federation members paused bridge nodes and are investigating the software flaw that enabled the unauthorized peg-out.

Summary

TRM Labs Finds

TRM Labs found infrastructure flaws caused 15% of incidents but 76% of crypto losses in early 2026.
Ledger CTO Charles Guillemet publicly doubted the white-hat claim, likening it to Ronin and Euler hacks.
Blockstream’s roadmap now emphasizes a BitVM 1-of-n bridge to reduce reliance on trust-based federated designs.
A July 2026 study noted under 1% of BTC in DeFi versus ~30% of ETH, limiting Bitcoin-DeFi adoption.

History

Historical Context

The DAO launched on 30 April 2016, raising over 11 million Ether from more than 11,000 investors. On 17 June 2016 a recursive-call exploit drained 3.6 million Ether (?$50 million), prompting the Ethereum community, led by Vitalik Buterin, to hard-fork the chain and later allocate 1.5 million Ether to a recovery fund in 2020. The incident remains a benchmark for blockchain security and regulatory scrutiny.

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Liquid Halts Transactions

Blockstream’s Liquid Network halted new transactions after white-hat hackers withdrew about 4,000 BTC (~$320 million).
The withdrawal stripped roughly 95% of the federation wallet’s 4,200 BTC, leaving about 200 BTC.
Liquid said the BTC left via SideSwap, whose peg-out authorization key remained uncompromised.
Federation members paused bridge nodes and are investigating the software flaw that enabled the unauthorized peg-out.

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