The Bitcoin-based Liquid Network says hackers withdrew $320 million in an exploit, according to a statement from the protocol on Thursday. The figure makes this one of the largest cryptocurrency hacks of the year and one of the biggest ever recorded on a Bitcoin-adjacent network.

The disclosure came from the Liquid Network itself. Reuters first reported the figure. The protocol has not yet published a full technical post-mortem, so the exact vulnerability remains unconfirmed at this stage.

What is the Liquid Network?

Liquid is a Bitcoin sidechain developed by Blockstream, the infrastructure company led by Adam Back. It settles bitcoin and issued assets between exchanges, market makers and financial institutions. Members of the federation include some of the largest trading venues in the industry.

That institutional user base is the reason the number stings. A $320 million withdrawal does not just hit one protocol. It touches the settlement layer that brokers and exchanges rely on to move bitcoin between venues quickly and confidentially.

What does this change for institutional Bitcoin rails?

Sidechains live and die on custody assumptions. Liquid operates as a federated system, meaning a set of functionaries rather than Bitcoin miners secure the network's peg. Any breach raises immediate questions about which keys or signing infrastructure were compromised, and whether the federation's security model held.

Until Liquid and Blockstream publish forensic details, counterparties cannot fully assess their exposure. Exchanges that route volume through Liquid will likely pause or slow peg-out operations while they verify balances. That is the standard operational playbook after an exploit of this size.

For institutions weighing Bitcoin settlement infrastructure, the incident will sharpen due diligence on federated designs versus alternative rails. Confidence, once spent, is expensive to redeposit.

How big is $320 million?

The figure puts the Liquid incident in the top tier of crypto exploits. It exceeds most DeFi protocol breaches recorded this cycle and approaches the scale of exchange-level hacks that drew regulatory action in prior years. Reuters reported the amount as stated by the network.

The precise breakdown of what was withdrawn — bitcoin pegged into the sidechain, issued assets such as L-BTC, or both — has not been disclosed. That detail will determine how much of the loss is recoverable and who bears it.

What happens next?

Expect a technical disclosure from Liquid and Blockstream in the coming days, including the attacked component and any mitigation steps. Federation members will need to coordinate on a response, which could mean halting peg-outs or rotating compromised keys.

If the stolen funds move on-chain, blockchain analytics firms will track the addresses involved, and exchanges will add them to freeze lists. Recovery in cases of this size typically depends on how quickly laundered funds reach a regulated off-ramp.

The incident also lands as regulators intensify scrutiny of custody and settlement infrastructure. A nine-figure breach on a network used by regulated trading firms will not go unnoticed by agencies already examining how institutional Bitcoin rails fail.