A bug disguised as a heist. This is how we could summarize the week of the Bitcoin bridge from Blockstream, Liquid Network. The latter has been suspended since September 6 after the withdrawal of nearly 4,000 BTC by authors who present themselves as white hats. These would therefore be so-called “ethical” hackers, supposed to act for the security of the network, not for their own account.
Bitcoin does not flinch. This Monday it is at around $79,800, almost at the same level as before the incident. Institutional flows continue to flow as if nothing had happened.
Liquid Network: the rescue that looks like a theft
The mechanism is almost more interesting than the amount stolen. No stolen keys. No heist film style intrusion. It was a simple bug in the Elements protocol that allowed approximately 3,996 BTC to be transferred, or $320 million at the current price of bitcoin.
In addition to these hundreds of millions of dollars that have flown away, this represents 95% of the sidechain's reserves. In fact, the federation only has 197 BTC left.
Two messages are then exchanged on the blockchain. The authors of the withdrawal first slip this into the on-chain data: “We are ethical hackers. Contact us on Chain. », with 1,000 sats returned to the federation as a signature. Blockstream responds an hour later, on the same channel: “Please contact [email protected]”.
However, nothing proves the good faith announced: a true white hat warns before acting, it does not empty a bridge of 95% of its reserves before offering a contact channel. Liquid Network had already come close to an incident in the past: in 2020, a flaw in its relief mechanism left a window of approximately one hour during which 870 blocked BTC could have been diverted, without any funds ultimately being affected.
The debate on the good faith of the authors, on-chain message, Signal track, precedent from 2020, is treated in our dedicated article. Here, the main thing is in one line: the funds have gone out, the bridge is cut, Bitcoin has not moved.
Cross-chain bridges, the weak link in Bitcoin
A parenthesis is necessary here, however. Liquid is not Bitcoin. And it is not layer 2 in the sense that we understand it on Ethereum. On Ethereum, a typical L2, rollup Optimistic or ZK, inherits the security of the basic blockchain: funds are locked in a contract, fraud is contested on-chain, settlement ends with Ethereum.
On Bitcoin, the menu is short, and there is nothing homogeneous about it. Lightning remains a network of channels. Bitcoins always under the control of keys that the user can assert on the main chain. Liquid is something else: a federated sidechain. Security therefore does not descend from Bitcoin. It depends on a club of operators and software, Elements, which has just shown that one bug is enough.
Hence the maximalist paradox, a little stiff but fair: the Satoshi chain has not moved a single satoshi. No reorganization, no double spending, no gap in consensus. What gave way was the bridge that had been built next to it.
Bitcoin ETFs were not afraid of the bug
Meanwhile, the market acts as if nothing happened. U.S. Bitcoin spot ETFs captured $986.9 million in the week ended September 4, a third consecutive weekly inflow that brings the three-week cumulative to $3.8 billion, according to The Block.
BlackRock's IBIT leads the way with $691.5 million alone. August, as a whole, captured $3.52 billion, their best month for spot Bitcoin ETFs since September 2025.
Two stories therefore unfold in parallel, without ever really intersecting. On one side, a suspended sidechain and a community wondering if it has just witnessed a bona fide theft or just plain theft. On the other, institutional flows which do not even notice the incident.
