Blockstream’s Liquid sidechain has been paused after roughly 4,000 BTC left the federation wallet that backs L-BTC in circulation. The network said the withdrawals were made through the SideSwap Peg-out Authorization Key, or PAK, but added that the key itself was not compromised. Two transfers moved the funds to a single Bitcoin address, which later posted an onchain message identifying the sender as white hats and asking to be contacted onchain. Blockstream responded with an onchain message directing the party to security@blockstream.com. Liquid then disabled bridge nodes, told exchanges to pause L-BTC deposits and withdrawals, and said assets issued on Liquid, including USDT and DePix, were unaffected. The incident has raised questions because Liquid’s peg wallet uses an 11-of-15 multisig and peg-outs are also restricted by a PAK list that, according to Liquid documentation, takes three days to update. Commentators including JAN3 CEO Samson Mow and Ledger CTO Charles Guillemet weighed in as additional onchain messages appeared, including a Signal contact request sent to the address holding the funds rather than from it.