SideSwap Suspends Liquid Services After Invalid L-BTC Minting Incident

SideSwap said a customer sent 4,000 L-BTC to its peg-out service at 14:05 UTC, and the order was processed normally. According to ChainCatcher, the L-BTC was burned on Liquid with a valid peg-out authorization, and the Liquid Federation later paid 3,996 BTC to the customer’s Bitcoin address at 14:28 UTC. Blockstream later confirmed that the L-BTC had been minted through an Elements software vulnerability. SideSwap said its peg-out authorization key and systems were not compromised, and the service could not distinguish the tokens from other L-BTC. SideSwap added that it is a non-custodial service, user wallets were not affected, and assets remain controlled by users’ own keys. Liquid has been suspended by the Federation, and SideSwap said swaps, peg-ins, and peg-outs will remain paused until the network is restored. Completed peg-outs paid on Bitcoin are not affected. Users with unfinished peg-ins or peg-outs can send transaction IDs to [email protected] for separate handling, and SideSwap asked users not to send new peg-in or peg-out deposits before services resume.