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      Liquid Sidechain Suspends Operations After Major Bitcoin Withdrawal

      Blockstream's Liquid sidechain has been paused following the withdrawal of approximately 3,998 BTC from its federation wallet on Sunday. The funds were transferred using a valid authorization key, and the recipient identified themselves on-chain as 'white hats.' The wallet that backs all L-BTC in circulation now contains only 197.47 BTC, significantly down from its previous balance.

      The withdrawal occurred in two transactions, with the first sending 2.5 BTC and the second transferring nearly 3,996 BTC. Both transactions were confirmed within a short time frame and directed to a single address, which now holds around $319.5 million worth of Bitcoin. Shortly after the withdrawal, the recipient consolidated the funds and sent a message indicating their identity, prompting a response from Blockstream.

      In response to the incident, Liquid has disabled bridge nodes to prevent new transactions and has advised exchanges to halt L-BTC deposits and withdrawals. While the peg wallet is secured by an 11-of-15 multisig, the exact nature of the vulnerability that allowed the withdrawal remains unclear. Liquid has stated that USDT and other assets issued on the platform are unaffected by this pause in operations.

      This incident marks a significant event for Liquid, which has been operational since 2018 as a settlement layer for exchanges and traders. The recent withdrawal comes just weeks after another Bitcoin-adjacent network, Core Lightning, advised its node operators to go offline due to security concerns. Blockstream's CEO has yet to comment publicly on the situation.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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