Liquid Network said a security incident led to about 4,000 bitcoin being stolen from its Federation wallet by a white-hat hacker. According to PANews, the amount represents about 95% of Liquid's reported bitcoin reserves, which were about 4,200 bitcoin before the incident.

Liquid said the funds were withdrawn through SideSwap PAK, or Peg-out Authorization Key, and said the key and other keys were not compromised. The network did not explain the root vulnerability behind the withdrawal. Liquid has notified some cryptocurrency exchanges to suspend or prepare to suspend deposits and withdrawals of LBTC, its bitcoin-backed token.

The Liquid sidechain has been paused, and bridge nodes have been temporarily shut down to block new transaction submissions. Blockstream, the network's technology provider, is working to contact the parties responsible. Other assets issued on Liquid, including USDT, DePix, and RWA, were not affected.