Liquid Hackers Return $270M in Bitcoin After Swiping $320 Million

Hackers infiltrated the Liquid Network, stealing approximately $320 million worth of Bitcoin over the weekend. Surprisingly, they returned most of the stolen funds, keeping around 598 out of the 4,000 coins taken, valued at about $47 million. The attackers claimed they kept the funds as a "bounty" to highlight a vulnerability in the Liquid Network.

Launched in 2018 by Blockstream Inc., the Liquid Network is a layer two Bitcoin network, also known as a sidechain. This network processes transactions through a centralized workflow, unlike Bitcoin's decentralized approach. Instead of 80 organizations, only about 15 are involved in verifying transactions at any given time. The Liquid Network allows users to move funds to and from other blockchains via a system called SideSwap.

This system relies on a peg-out authorization key (PKA) for transferring cryptocurrency. The hackers exploited a flaw in the Elements open-source project, which powers the Liquid Network's sidechain features. While the stolen Bitcoin amounted to about 95% of the Liquid Network's Bitcoin reserve, other cryptocurrencies on the sidechain remained unaffected.

After the breach, the hackers left a message in a public Bitcoin transaction log, stating they would return most of the stolen cryptocurrency once Blockstream patched the vulnerability. This incident follows a series of recent cyberattacks on cryptocurrency platforms, with hackers stealing around $136.3 million in August alone.