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Cybersecurity

Hackers return most of $320M bitcoin stolen from Liquid Network after patch

Hackers stole about $320 million in bitcoin from the Liquid Network, then returned most of it after the platform patched a vulnerability, keeping $47 million as a bounty, according to a report.

AI News Feed · 2026-09-08 07:52

The attackers handed back the majority of the 4,000 bitcoin they had taken, keeping 598 bitcoin, worth around $47 million, as a so-called bounty for drawing attention to the security flaw. In a message embedded in a public Bitcoin transaction log, the hackers said they would return the stolen funds once the vulnerability was fixed.

The Liquid Network is a layer-two Bitcoin sidechain launched in 2018 by Blockstream Inc., a venture-backed cryptocurrency company. Unlike Bitcoin’s decentralized transaction verification, the Liquid Network uses a centralized workflow in which about 80 organizations, with around 15 active at any given time, validate payments. The network also lets users conceal transaction values and, through a system called SideSwap, move funds to and from other blockchains.

SideSwap was at the center of the heist, according to the report. Users deposit bitcoin into SideSwap, which moves the funds to a virtual vault and issues an equal amount of platform-specific stablecoins. The process relies on a piece of data known as the peg-out authorization key (PKA). The Liquid Network’s maintainers said the hackers used the PKA to steal the coins but also asserted that the key itself was not compromised.

SideSwap’s developers said the hackers exploited a flaw in Elements, an open-source project that underpins the Liquid Network. The stolen 4,000 coins represented about 95% of the network’s bitcoin reserve. Other cryptocurrencies stored on the sidechain were not affected.

The breach is the latest in a string of recent cyberattacks against cryptocurrency platforms. In August alone, hackers stole an estimated $136.3 million across 50 breaches, according to the SiliconANGLE report.