Bitcoin
Blockstream Recovers Majority of Bitcoin Following Liquid Network Security Vulnerability
An exploit affecting the Liquid Network's Elements software led to unauthorized token minting before federation members recovered 3,400 Bitcoin.
On September 6, 2026, at block 4,050,336, the Liquid Network suffered a security breach caused by a range proof verification caching flaw in its Elements software. The vulnerability enabled attackers to mint roughly 4,000 unbacked LBTC tokens and execute peg-out transactions through SideSwap, a federation member holding authorized peg-out status.
Because the verification failure occurred prior to submission, SideSwap's node and network functionaries processed the transactions as valid, releasing real Bitcoin to a whitelisted address before the funds were moved off-platform. The unauthorized withdrawals reduced the network's Bitcoin reserves from approximately 4,205 BTC to 197 BTC. Blockstream confirmed that private keys remained secure and federation nodes functioned as designed.
The Liquid Federation has since recovered 3,400 BTC, leaving 598.5 BTC unrecovered while the network remains paused. Other assets hosted on Liquid, such as USDT, were not directly compromised. Developers plan an emergency release of Elements version 23.3.4 within 48 hours to resolve the vulnerability and resume operations.
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