Liquid Network Resumes Block Production Amid Ongoing Withdrawal Fallout

The Liquid Network has resumed block production after a significant Bitcoin withdrawal that forced it to halt operations. The withdrawal, which removed about $320 million in BTC from the network, was made possible by an exploit in the Elements software used by the network.

Functionary nodes on the network have received software updates and are now signing and validating blocks again, but transactions remain suspended while developers monitor the network's condition. The update, which changed how the software verifies and stores confidential transaction proofs, was designed to address a flaw in the Elements software that allowed an actor to create unbacked L-BTC tokens.

In an unusual development, the actors behind the withdrawal claimed to be white-hat hackers and returned 3,400 BTC to the federation wallet after nodes were patched. However, about 598 BTC remains outside the wallet, worth around $46 million at current prices.