Nearly 4,000 bitcoin, valued at roughly $319 million, moved out of the Liquid Network's federation wallet on Sunday, according to multiple reports. An unidentified party left an onchain message stating "we are whitehats. contact us on chain." Blockstream, Liquid, and Adam Back had not publicly addressed the incident as of early Sunday afternoon.
Onchain researcher Ergo BTC identified two linked bitcoin transactions showing the movement. The Liquid peg-out reduced the network's reserve from approximately 4,200 BTC to 207.275 BTC, as confirmed by Blockstream's Liquid explorer.
Unusual Movement Through Liquid's System
The transfer drew attention because Liquid's peg-out system typically requires LBTC to be destroyed on the sidechain before federation functionaries process corresponding bitcoin withdrawals. Federation holdings normally require an 11-of-15 multisignature authorization, while the Peg-out Authorization Key system restricts payments to approved member wallets.
How the bitcoin moved through these security layers remains unclear. Potential explanations include a compromised whitelisted wallet, misuse of Liquid's security mechanisms, or a coordinated extraction to protect funds after discovering a vulnerability. None of these possibilities has been confirmed.
Questions Remain Unresolved
The nearly 4,000 BTC remains concentrated on the Bitcoin blockchain and had not been mixed at the time of reporting. Blockstream and Liquid await clarity on the cause of the reserve collapse and the circumstances surrounding the transfer. The unidentified party's "whitehats" message opened an onchain communication channel, but verification of their stated intentions remains pending as the situation continues to develop.
