Self-styled ‘whitehat’ drains about 4,000 BTC from Liquid peg
A person claiming to be a ‘whitehat’ withdrew about 4,000 BTC from Blockstream’s Liquid peg by exploiting the peg-out mechanism, according to community claims.
Claims circulating in the crypto community say a person identifying as a ‘whitehat’ withdrew about 4,000 BTC from the reserve that backs Blockstream’s Liquid sidechain. The individual posted publicly that they moved the coins by exploiting the peg-out mechanism that converts on-chain Bitcoin to Liquid Bitcoin (L-BTC). Independent verification of full control of the funds is pending.
Blockchain records show large transfers involving Liquid-related addresses consistent with a significant outflow. Market observers reported unusual peg activity after the disclosure. Blockstream, which operates Liquid, did not immediately publish a detailed technical statement when the claims emerged.
Liquid is a federated sidechain used by exchanges and trading desks to move bitcoin faster and to enable confidential transactions. The one-to-one peg relies on a set of functionaries that sign peg-outs. The person who described the exploit identified the peg-out authorization process as the point of failure and said the withdrawals bypassed expected controls.
On-chain analysts and monitoring services began tracing the moved funds and watching several wallet addresses for deposits to exchanges or other transfers. Some custodians and platforms that use Liquid reviewed integrations and internal controls. Public-facing Liquid services typically have procedures to pause peg-outs or flag large inbound transactions for review.
In a public post, the individual called the action ‘whitehat’ and asserted the coins would be returned if certain conditions were met. Security researchers noted that unauthorized extraction of funds can create legal and operational issues even when the actor claims benevolent intent.
Market impact and the exact loss are under investigation. Any response by Blockstream or the Liquid federation, such as pausing peg-outs or rotating signatories, could affect settlement flows for trading desks and exchanges that use Liquid. Legal authorities may become involved depending on how the withdrawals are classified.
The material on GNcrypto is intended solely for informational use and must not be regarded as financial advice. We make every effort to keep the content accurate and current, but we cannot warrant its precision, completeness, or reliability. GNcrypto does not take responsibility for any mistakes, omissions, or financial losses resulting from reliance on this information. Any actions you take based on this content are done at your own risk. Always conduct independent research and seek guidance from a qualified specialist. For further details, please review our Terms, Privacy Policy and Disclaimers.
Articles by this author
