Roughly 4,000 of the 4,200 bitcoin held by the Liquid Network's federation wallet were withdrawn in an attack that halted the sidechain, a separate story from bitcoin's broader price slide this week.
The Liquid Network, a Bitcoin sidechain some exchanges use for settlement, suffered a security breach on September 7 in which roughly 4,000 of the roughly 4,200 bitcoin held in the network's federation wallet were withdrawn. The sidechain halted new transactions in response. The attackers reportedly made a conditional offer to return the funds, framing themselves as white-hat hackers rather than criminals. Total crypto-hacking losses for the first week of September have been estimated at roughly $322 million, with this incident accounting for the large majority of that figure.
The breach has drawn little attention outside crypto-focused outlets despite the scale of funds involved.
Bitcoin itself has continued sliding this week, trading near $78,400, down more than 1% on the day and extending a decline tied explicitly to rising odds of a Federal Reserve rate hike, not to the Liquid Network breach. Nothing ties the breach to bitcoin's broader decline: one is a security failure at a piece of Bitcoin's settlement infrastructure, the other is a macro-driven repricing tied to Fed policy expectations. U.S. spot Bitcoin ETFs recorded roughly $1 billion in inflows over the prior week, the third straight positive week, even as the price fell, a contrarian data point that remains unexplained.
The Liquid Network episode is worth tracking on its own terms: a sidechain losing nearly all of its reserves is a meaningful test of how exchanges that relied on it for settlement respond, and whether the attackers' offer to return funds is followed through on. But it belongs in a separate conversation from bitcoin's price.