Liquid Network Halts After 4,000 BTC Drained in Alleged White Hat Hack

Key Facts

1Blockstream's Liquid Network halted after 4,000 BTC were drained from the federation wallet backing L-BTC.

2The drained assets are valued at nearly $320 million, with the attackers claiming to be white hat hackers via an on-chain message.

Amid escalating security challenges for cryptocurrency Layer-2 solutions, Blockstream's Liquid Network has halted operations following the withdrawal of 4,000 BTC from the federation wallet backing L-BTC. According to reports, the drained assets are valued at nearly $320 million, removed via two transactions that emptied the majority of the network's reserves. The attackers left an on-chain message claiming to be white hat hackers, demanding that the company fix software vulnerabilities before returning the funds.

This incident highlights the vulnerabilities of protocols relying on federation wallets to secure pegged assets, as only a small fraction of the previous reserves remain in the wallet. Per analyst data, this breach places significant pressure on the reliability of the L-BTC peg to Bitcoin, although other assets on the network, such as USDT and real-world assets (RWAs), reportedly remain unaffected. These developments occur as markets scrutinize the resilience of Bitcoin infrastructure against sophisticated attacks targeting software bridges.

Looking ahead, network operations remain suspended until a public agreement is reached with the attackers or comprehensive software patches are deployed. Based on available data as of September 7, 2026, specific price levels for the affected instruments are unavailable, but focus remains on Blockstream's ability to recover the collateral. Traders are also monitoring upcoming global economic catalysts, including Japan's Consumer Confidence data, which may influence broader market sentiment.