Liquid Network Halts After Purported White Hats Withdraw $320 Million in Bitcoin

Liquid Network, a Bitcoin sidechain developed by Blockstream, uses LBTC tokens backed one-for-one by bitcoin to support faster settlement and digital-asset issuance. The withdrawal is significant because Liquid relies on a federation to secure funds moved from Bitcoin onto the sidechain. A loss or prolonged freeze could test confidence in LBTC’s backing and expose operational and governance risks for exchanges, traders and institutions using the network.

Liquid Network halted operations in September 2026 after individuals describing themselves as “white hats” withdrew about 4,000 BTC, valued at roughly $320 million. Exchanges also suspended LBTC deposits and withdrawals while the incident was investigated. Blockstream said it was seeking contact with the people involved to address the situation, but it had not confirmed when the network would restart or whether all of the bitcoin would be returned.