Liquid Network Resumes Block Production After $320M Bitcoin Withdrawal

The Liquid Network has resumed block production after a $320 million Bitcoin withdrawal forced it to halt operations.

Functionary nodes received required software updates and have restarted signing and validating blocks, but transactions remain suspended while developers monitor the network's condition.

The restart allows Liquid to test its updated infrastructure without reopening transfers or exposing the peg system to new activity. The federation wallet still holds only about 202 BTC after a hacker exploited a proof-verification flaw in Elements software, creating unbacked L-BTC and withdrawing most of the Bitcoin held in the wallet.

The actors who carried out the withdrawal identified themselves as 'white-hat hackers' but have not established permission to create the L-BTC or withdraw the underlying Bitcoin. A partial repayment of 3,400 BTC restored about 85% of the withdrawn funds, worth approximately $270 million at the time.