Bitcoin Sidechain Liquid Loses $319 Million in Mysterious “White Hat” Withdrawal

Blockstream’s Liquid sidechain lost close to 4,000 Bitcoin, worth roughly $319 million, after unknown parties pulled funds from its federation wallet, which fell from 4,200 BTC to just over 207 BTC. An on-chain message claimed the movers were “white hats” and asked to be contacted, though this has not been confirmed.

How the Funds Left the Network

Liquid said the withdrawal went through the SideSwap peg-out key, adding that the key itself was not compromised. Bridge nodes were switched off immediately, halting new transactions while the team investigates. SideSwap later pointed to a bug in Blockstream’s Elements software as the likely cause.

Trader DBCrypto noted the coins remain untouched and unmixed, suggesting this looks more like a security exercise than theft. Jan3 chief Samson Mow called it a difficult moment the community would work through together.