Liquid Network, a Bitcoin payments and settlement platform, has lost about $320 million in Bitcoin after attackers breached its federation wallet in a major security incident.
The network also revealed that about 4,000 of the 4,200 Bitcoin held in the wallet were taken during the incident, representing about 95 per cent of the wallet’s holdings.
The network made this known on Monday via X, adding that, “Liquid wallets will be impacted, and we’re sorry for any inconvenience.”
The firm while announcing the suspension of new transactions as it works to resolve the incident noted that, the federation members were working to restore normal network activity, describing the attackers as “purported white-hat hackers”
According to the report, the funds were withdrawn through SideSwap, a settlement platform authorised to facilitate withdrawals from the Liquid Network. However, Liquid said the cryptographic key used in the transactions was not compromised, raising questions about how the attackers were able to initiate the withdrawals.
The incident has renewed concerns over vulnerabilities in cryptocurrency infrastructure, particularly platforms responsible for holding large reserves of digital assets.
Liquid Network is a Bitcoin-linked blockchain designed to facilitate faster transactions and settlements. It is managed by a federation comprising exchanges, infrastructure companies and asset managers.
The latest breach adds to a series of attacks targeting cryptocurrency platforms this year. A recent attack on a crypto-linked lending platform reportedly resulted in the loss of about $6 million. At the same time, other incidents have highlighted continuing security challenges around the storage and movement of digital assets.
The Liquid Network hack is particularly significant because of the scale of the funds affected and the fact that the network has temporarily halted new transactions.
With nearly the entire Bitcoin balance of its federation wallet withdrawn, the incident could intensify scrutiny of the governance, validation and reserve-management arrangements underpinning blockchain networks.
Following this development, it became pertinent for investors to ensure strict control around custody, authorisation and real-time monitoring of crypto assets.
It was gathered that the affected Bitcoin was reportedly moved through SideSwap, but the network the modalities with which the attackers gain access remains unknown.
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