Liquid Network breach sees 4,000 BTC withdrawn; Bitcoin ETFs record strongest three‑week inflows of 2026

In a major incident affecting the Liquid sidechain, about 4,000 Bitcoin – valued at roughly $319 million – were withdrawn from the network’s federation wallet. The withdrawal was claimed by an entity describing itself as a “white‑hat” hacker, citing an on‑chain OP_RETURN message that read “we are whitehats. contact us on chain.”

Liquid response and technical details

Blockstream, which operates the Liquid Network, immediately disabled bridge nodes and instructed exchanges to pause LBTC deposits and withdrawals. The network’s explorer shows the federation wallet balance falling from 4,200 BTC to just over 207 BTC. According to the network’s statement, the funds were moved via the SideSwap Peg‑out Authorization Key (PAK), which itself was not compromised. The sidechain remains paused pending investigation.

Analyst perspective

Crypto analyst DBCrypto noted that the withdrawn coins have not been mixed or moved on other blockchains, a pattern more consistent with a white‑hat extraction than a typical theft. He also highlighted that the incident raises serious questions about the sidechain’s multisig and whitelist safeguards.

Bitcoin ETF inflows hit three‑week peak

While the Liquid breach unfolded, US spot Bitcoin ETFs recorded their strongest three‑week inflow stretch of the year. According to SoSoValue data, the funds attracted $986.9 million in the most recent week, bringing total net inflows over the three‑week period to $3.8 billion. Total net assets across the ETFs now stand at $101.3 billion, with cumulative net inflows of $55.6 billion since the start of the year.

Market snapshot

• Bitcoin (BTC) price: $80,234 (+2.6%)
• Ethereum (ETH) price: $2,513 (+2.3%)
• Overall crypto market cap: $2.72 trillion

Key takeaways

• Approximately 4,000 BTC withdrawn from Liquid; sidechain operations paused.
• Blockstream asserts the Peg‑out Authorization Key was not compromised.
• Analyst notes lack of mixing suggests a white‑hat motive.
• US Bitcoin ETFs saw $3.8 billion net inflows over three weeks, the highest in 2026.
• Bitcoin price remains just above $80 k, supporting bullish sentiment.