SideSwap says Liquid outflow stemmed from Elements flaw, not a hack

Bitcoin swap service SideSwap issued an official statement on the recent 4,000 BTC outflow from the Liquid Network, worth about $320 million. SideSwap said it legitimately burned L-BTC in response to a customer withdrawal request and paid out 3,996 BTC on the Bitcoin mainchain. However, after confirmation from Blockstream, the company said the L-BTC involved had been created abnormally due to an internal flaw in Elements, the sidechain software. SideSwap stressed there was no leak of functionary approval keys, or PAK, and no system breach, while wallet assets managed through users’ private keys were unaffected because of the service’s non-custodial structure. The Liquid Network is currently temporarily halted by the federation. Pending transactions will be handled separately if submitted through a dedicated email address, and the operator urged users to avoid new deposits and withdrawals until normal service resumes.