Bitcoin
Liquid Network Restarts After $320 Million Exploit While Peg-Outs Stay Disabled
Blockstream's Liquid Network has resumed block production and internal transactions following a $320 million exploit, though conversions back to Bitcoin remain suspended.
Liquid Network has begun bringing operations back online following an exploit that drained approximately $320 million from its federation wallet. Block production resumed on September 10 as functionary nodes recommenced signing and validating blocks, followed later that evening by the restoration of on-chain asset transfers.
While users can once again move funds within the sidechain, peg-outs remain disabled. This restriction prevents holders from converting LBTC back to BTC on the main Bitcoin blockchain. Blockstream indicated the function will stay offline until internal ledger states and BTC/LBTC reserve balances are fully verified.
The disruption stemmed from a vulnerability in the proof-verification cache within Liquid's underlying Elements software. Developers issued the Emergency Elements v23.3.4 update to address the flaw by reinforcing the cache keys used during range-proof verification.
Blockstream stated it will not pay a ransom, describing the incident as outright theft rather than white-hat research. The firm announced it is collaborating with law enforcement, exchanges, and blockchain security investigators to trace and recover the stolen funds.
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