Hacking News
Liquid Network Vulnerability Leads to BTC Drain
Liquid Network, a Layer 2 (L2) platform, experienced a significant security breach where nearly 4,000 BTC were drained from the network. The hacker, identified as a 'white hat' participant, initially returned about 3,400 BTC but kept 598.5 BTC as a 'bounty' for Blockstream. Blockstream refused to accept the returned funds, leading to the 598.5 BTC still being held by the hacker. The Liquid Network has been frozen for 35 days, with an independent audit of their Elements software version 23.3.4 underway. Holders of LBTC tokens, which are pegged to BTC, have not been able to redeem their tokens, with some holders opting to move their funds through alternative platforms like SideSwap and SideShift.ai, incurring a 5% spread and fees. The situation highlights the ongoing risks of security vulnerabilities in blockchain networks and the challenges faced by token holders in such scenarios.