TLDRLiquid reported that attackers removed about 4,000 Bitcoin, worth roughly $320 million, from its federation wallet.The funds moved through SideSwap’s Peg-out Authorization Key service, although Liquid and SideSwap said the PAK itself was not compromised.SideSwap linked the affected L-BTC to a reported vulnerability in Elements, the Bitcoin-based software behind Liquid.Liquid disabled bridge nodes and paused network activity while federation members investigated the incident.Charles Hoskinson used the breach to warn that AI could make software vulnerabilities easier to discover and exploit.Cardano founder Charles Hoskinson has responded to reports that attackers removed about 4,000 Bitcoin from the Liquid Network federation wallet. The reported loss totaled roughly $320 million and prompted Liquid to pause network activity while federation members reviewed the incident.Charles Hoskinson linked the breach to wider concerns about artificial intelligence and software security. His response focused on whether traditional testing can keep pace as AI tools become better at finding code weaknesses and automating attacks.Charles Hoskinson Raises AI Security ConcernsLiquid said the attackers moved the funds through SideSwap’s Peg-out Authorization Key service. SideSwap and Liquid both said attackers did not compromise the PAK itself. SideSwap instead pointed to a vulnerability in Elements, the Bitcoin-based software that Liquid uses.We are aware of a security incident on @Liquid_BTC. Purported white-hat hackers have withdrawn ~4,000 BTC (~$320 million) from the Liquid Federation wallet. The @Blockstream team is working on contacting them on-chain with a signed message.What we know so far is that the funds…— Liquid Network (@Liquid_BTC) September 6, 2026After the transaction, Liquid disabled bridge nodes and paused network operations. Exchanges also received alerts and began suspending, or preparing to suspend, L-BTC deposits and withdrawals while the investigation continued.The transaction also carried an OP_RETURN message from the attackers, who described themselves as white hats and asked for contact through the blockchain. Liquid has not said that claim changes its investigation. The network continues to treat the transfer as an unauthorized movement of federation-held Bitcoin, still under review.Formal Methods Enter the Security DebateCharles Hoskinson said formal methods could offer stronger protection as AI-driven security risks increase. Formal methods use mathematical specifications and proofs to check whether software follows its intended design before developers release it.AI systems can now review source code, search for weaknesses, and automate parts of phishing and social-engineering attacks. The reported Coldcard theft of about $130 million in Bitcoin has also added attention to the role advanced tools may play in future crypto attacks.Cardano’s Focus on Formal VerificationCardano has used academic research, peer review, and formal verification as part of its development process. Its Ouroboros consensus protocol came from formal research, while Cardano developers have used mathematical methods to test important protocol properties.The network also uses Haskell and Plutus, which rely on strong type systems and functional programming. These tools can help developers find some software errors earlier. Charles Hoskinson has long presented this model as a way to reduce weaknesses before code reaches production safely.The post Charles Hoskinson Sounds Alarm After Liquid Hack appeared first on Blockonomi.