Liquid Sidechain Paused After 3,998 BTC Leaves Federation Wallet
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Liquid operators paused the Liquid sidechain after 3,998 BTC moved out of the federation wallet to external addresses, prompting an investigation into whether the transfer was authorized. The pause halted peg-out activity and withdrawals, temporarily disrupting liquidity and settlement on the sidechain. Implication: the incident undermines confidence in Liquid’s federated custody model and may push users and liquidity back to Bitcoin’s main chain or toward more trust-minimized alternatives.
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