According to Huoxing Finance, on the morning of September 9, Liquid Network released an incident report stating that on September 6, a vulnerability in its open-source Elements software was exploited, allowing attackers to mint approximately 4,000 LBTC not backed by BTC reserves and exchange them for about 4,000 BTC via SideSwap’s Peg-out mechanism. Following the incident, Liquid’s BTC reserves dropped from approximately 4,205 BTC to 197 BTC. Liquid stated that the incident was not caused by private key compromise or compromise of federation nodes. To date, the attackers have returned 3,400 BTC, with approximately 598.5 BTC still outstanding. Blockstream has completed the vulnerability patch, and the Liquid network remains suspended while the relevant team prepares an emergency release of Elements v23.3.4, which will be deployed after completing security reviews and restoring network integrity.
Liquid Network Reports 3,400 BTC Recovered Following Elements Software Exploit
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Summary
On September 9, Liquid Network revealed that a bridge exploit in its Elements software enabled attackers to mint 4,000 LBTC and convert them into BTC via SideSwap’s peg-out mechanism. On-chain data shows BTC reserves dropped from 4,205 to 197 BTC during the incident. The company confirmed no private keys were compromised. The attackers have returned 3,400 BTC, leaving 598.5 BTC outstanding. Blockstream has patched the vulnerability, and Liquid is preparing an emergency Elements v23.3.4 update following a security review and network recovery.
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