Liquid Network Comes Back Online After Bitcoin Exploit

The Liquid Network has resumed block production following a $320 million Bitcoin withdrawal, although transactions and peg operations remain suspended as recovery efforts continue.

In a Thursday post on X, Liquid said block production had resumed “without transactions” as a precaution while the network is monitored to “confirm full stabilization.” Required updates to its functionary and bridge nodes have been deployed, with functionary nodes now signing and validating blocks as intended.

Peg operations, including PAK-authorized peg-outs, remain suspended while the network works to restore its BTC/L-BTC reserve.

A day earlier, Liquid released an emergency update to Elements, the software underlying the network, to address the proof-verification cache vulnerability linked to the incident. The update, Elements v23.3.4, hardened cache keys used for range proofs as part of the network’s recovery plan.

Source: Liquid Network

$270 million in Bitcoin returned after exploit

Liquid paused operations on Sept. 6 after actors claiming to be white-hat hackers withdrew about 4,000 Bitcoin (BTC), worth roughly $320 million, from the network’s federation wallet.

The withdrawal represented about 95% of the wallet’s roughly 4,200 BTC balance and involved L-BTC originating from a bug in Elements, the open-source software underpinning Liquid.

The actors subsequently returned 3,400 BTC, worth about $270 million at the time, after Blockstream confirmed that affected bridge nodes had been patched. About 598 BTC, worth roughly $46 million at current prices, remained outstanding as of Sept. 7.

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