White-Hat Hacker Returns $268M in Bitcoin After Liquid Exploit

A white-hat hacker exploited a vulnerability in the Liquid Federation's Elements software and withdrew nearly 4,000 BTC worth around $320 million on September 6. The funds were frozen after Blockstream confirmed the issue.

The hacker then returned 3,400 BTC, valued at approximately $268 million, to the federation after receiving confirmation that a security fix had been implemented. The remaining 598.5 BTC, worth roughly $47 million, could potentially be a bounty reward, according to CertiK.

Liquid linked the withdrawal to SideSwap's Peg-out Authorization Key, or PAK, but stated that the PAK and other federation keys were not compromised. Blockstream later identified a bug in Elements as the source of the vulnerability.