$320M Liquid Network Heist: Attacker Offers Return of Stolen Bitcoin

A major exploit on the Liquid Network resulted in nearly $320 million being drained from the Liquid Federation wallet. The attacker, who exploited a bug in the Elements software underpinning the sidechain, triggered a valid peg-out using invalid L-BTC.

The federation's automated systems couldn't tell the difference between the valid and invalid transactions, allowing the attacker to make off with 4,200 BTC before the exploit left only 197 BTC remaining in the wallet. This meant that L-BTC was suddenly under-collateralized, with less than 5% of the backing remaining.

Blockstream moved quickly to address the issue, disabling bridge nodes and pausing network activity to prevent further damage. Exchanges were also instructed to suspend all L-BTC deposits and withdrawals.