The Bitcoin sidechain Liquid Network suffered a major security breach on Sept. 6, when roughly 4,000 BTC — worth approximately $320 million at the time — was withdrawn from its federation wallet. The stolen amount represented about 95% of the roughly 4,200 BTC held in the affected wallet. The actors later identified themselves onchain as white-hat hackers and offered to return most of the Bitcoin once the underlying vulnerability is patched.

The network halted new transactions while Blockstream and federation members investigated the security failure. Because Liquid operates as a federated sidechain — its locked Bitcoin is secured collectively by a group of functionaries rather than by Bitcoin miners — the incident puts scrutiny on that trust model, which differs fundamentally from the Bitcoin base network's proof-of-work security. Bitcoin's price remained largely unaffected, holding near $80,000, a muted reaction suggesting traders have so far treated the exploit as a Liquid-specific security problem rather than a compromise of the Bitcoin base network.

Nearly 4,000 BTC Drained From Liquid Network

In the latest white-hat crypto hack, the Bitcoin Layer-2 platform Liquid Network lost 4,000 Bitcoins, worth $320 million, from its federation wallet. The incident adds to a series of recent attacks that have raised concerns over digital-asset security.

Liquid Network said roughly 4,000 of the 4,200 Bitcoin held in its Liquid Federation wallet were stolen. The network described the perpetrators as "purported white-hat hackers" — actors who move funds after finding vulnerabilities with the intention of returning them, often for a fee.

In a message on X, Liquid Network stated:

"Liquid wallets will be impacted, and we're sorry for any inconvenience. Federation members are actively working on resolving this so we can restore normal network activity."

(https://x.com/Liquid_BTC/status/2096696272447218108)

The platform temporarily disabled its Bridge Nodes, meaning no new transactions can occur on the network. The Liquid sidechain has also been paused until the issue is resolved. The pause leaves users of L-BTC unable to move assets while the federation patches the flaw, highlighting the operational trade-off sidechains accept in exchange for faster settlement.

Liquid Network said the stolen funds were withdrawn through SideSwap, a settlement platform authorized to handle transfers from the network. Importantly, according to Liquid Network, the relevant key was not compromised.

Hackers Agree to Return Funds

Launched in 2018 by Blockstream Corp., Liquid is used by exchanges for faster settlement. The Layer-2 platform addresses the slower, more expensive transactions that can occur on the Bitcoin blockchain during periods of network congestion. The network issues Liquid Bitcoin, or L-BTC, against actual Bitcoin that is locked up.

Following the hack, preliminary evidence points to a bug that allowed the minting of L-BTC, which enabled the hackers to drain 95% of the platform's total BTC.

The hackers, however, have said they are willing to return the funds on certain conditions. Coin Bureau reported that the purported white-hat hacker behind the exploit has indicated plans to return most of the stolen funds after draining roughly 95% of Liquid Network's reserve wallet (https://x.com/coinbureau/status/2096837114990301418).

Responding to Blockstream onchain, the hacker asked: "Sending most back to [federation address], is that ok?"

"Please fix the bug first. The chain is at risk in the latest commit right now. Make sure every node is patched," the hackers added.

Crypto Hacks Take a Toll in 2026

The attack follows several recent incidents targeting crypto infrastructure. Last week, an attacker drained $6 million from a Crypto.com-linked digital-asset lending platform. In August, a hack involving the Coldcard offline Bitcoin wallet also raised concerns about the security of digital-asset storage.

Despite the incident, Bitcoin's price has seen no considerable impact. As of press time, BTC is trading down just 0.5% at $79,455, with a market cap of $1.6 trillion.

For the industry, the episode is likely to renew attention on sidechain and federation security audits, and on whether bridges and Layer-2 networks — which have repeatedly been targets of large exploits — can restore user confidence in centralized custody of Bitcoin-pegged assets. Watch for the full deployment of the patch across federation nodes and confirmation of the promised fund return.

This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets can experience sharp price movements.

Source: The Market Periodical (https://themarketperiodical.com/2026/09/07/crypto-hack-liquid-network-hackers-agree-to-give-most-funds-from-4000-bitcoin-theft/)