Liquid Network Survives $320M Hack: Block Production Resumes Amid Ongoing Recovery
The Liquid Network, a Bitcoin sidechain developed by Blockstream, has resumed block production after an exploit drained nearly $320 million worth of BTC from its reserve wallet. On September 6, an attacker exploited a vulnerability in the Elements software that underpins the network, allowing them to create unbacked L-BTC tokens and drain the federation's reserve.
The attack, which was discovered on September 7, resulted in the loss of approximately 3,996 BTC, leaving the federation with just 197 BTC. However, the attackers, who claim to be white-hat hackers, returned 3,400 BTC to the federation the next day, keeping 598.5 BTC for themselves.
Blockstream's team deployed emergency software updates to patch the vulnerability and resumed block production on September 10. While the network is now operational, user transactions and peg operations remain suspended due to ongoing recovery work.