Liquid Network suffered a security incident after a white-hat hacker withdrew about 4,000 BTC, worth approximately $320 million, from its Federation wallet. The amount represented roughly 95% of Liquid’s reported bitcoin reserves, which stood at about 4,200 BTC before the incident. The Liquid sidechain has paused operations, and major exchanges have suspended LBTC deposits and withdrawals. Liquid said the funds were withdrawn through the SideSwap PAK, or Peg-out Authorization Key, while stating that this key and other keys were not compromised. The network has not explained the underlying vulnerability. Liquid has temporarily shut down bridge nodes to prevent new transactions from being submitted to the network. Other assets issued on Liquid, including USDT, DePix and RWA assets, were not affected by the incident.