Liquid Network Hack Exposes $320M Bridge Flaw
A major cryptocurrency hack occurred on the Liquid Network, resulting in losses of over $320 million. This single event accounted for more than 99% of the total reported figure of $322 million in cryptocurrency hacks for the first week of September.
The hack exposed a bridge flaw in the Bitcoin sidechain, highlighting vulnerabilities in Bitcoin sidechain interoperability. The Liquid Network's Peg-Out service was used to move 3,996 BTC from the federation wallet, valued at approximately $320 million at the time.
On-chain analysis pointed to a range-proof cache flaw in Elements, the open-source software powering the Liquid Network's confidential-transaction system. A fix had been merged into the Elements repository but was not included in the tagged build running on the network at the time of the incident.