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CryptoMediumUpdated•Originally published 7 September 2026•Updated 7 September 2026•
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Liquid Network Pauses Transactions After 4,000 BTC Worth About $320 Million Is Withdrawn

Key Facts

1About 4,000 BTC worth approximately $320 million was withdrawn from a wallet that had held about 4,200 BTC.
2Liquid said the funds moved through SideSwap’s PAK without that key or any other key being compromised.
3Liquid paused new transactions and LBTC deposits and withdrawals were suspended, while the Bitcoin base network was unaffected.
4As of September 7, 2026, official sources had not confirmed a return of the funds or a network-restart date.

Liquid Network said parties claiming to be white-hat hackers withdrew about 4,000 BTC, worth approximately $320 million, on September 6, 2026, from a federation wallet that had held about 4,200 BTC. The network paused new transactions while the incident was investigated.

Liquid said the funds moved through SideSwap’s Peg-out Authorization Key, or PAK, but that neither the SideSwap key nor any other key had been compromised. Exchanges were notified to suspend LBTC deposits and withdrawals, while bridge nodes were temporarily disabled, preventing new transactions from being submitted.

Liquid is a sidechain separate from the Bitcoin base network. Blockstream’s documentation says LBTC is backed 1-to-1 by BTC on Bitcoin, while exiting Liquid requires destroying LBTC before an equivalent amount of BTC is released through the federation-managed peg-out process.

Liquid said other assets issued on the network, including USDT, DePix and tokenized real-world assets, were not directly affected, although Liquid wallets and LBTC services were disrupted. The Bitcoin base network was also unaffected, concentrating the direct impact on Liquid’s operations and reserve backing.

Bitcoin and several other major cryptocurrencies traded lower on September 7, 2026, but the available evidence does not establish the Liquid incident as the cause of the broader decline. The coincident market move should therefore be separated from the incident’s confirmed effects: the transaction pause and disruption to LBTC operations.

Blockstream contacted the responsible parties through signed messages on Bitcoin, and the messages indicated that they offered to return most of the funds after the flaw was patched and all nodes were updated. As of September 7, 2026, official sources had not confirmed a return of the funds or a network-restart date; the next steps are BTC recovery, remediation of the flaw, and the safe resumption of bridge, deposit and withdrawal services.