Liquid Network maintains frozen Bitcoin redemptions with a 603 BTC reserve shortfall following a September Elements bug that enabled unauthorized L-BTC minting; white-hat recovery recovered 3,400 of 4,000 BTC.
Security & Exploits ·
An Elements bug on September 6 enabled unauthorized creation and redemption of L-BTC on Liquid Network, resulting in the loss of approximately 3,996 to 4,000 BTC from the federation reserve, valued at roughly $320 million at the time. While white-hat actors recovered about 3,400 BTC on September 7, a gap of 598 to 603 BTC remains outstanding. As of October 11, peg-outs converting L-BTC back to bitcoin remain suspended.
Liquid Network has resumed operation but the network maintains frozen Bitcoin redemptions pending full reserve backing of circulating L-BTC and completion of security reviews. The shortfall represents the difference between the total amount withdrawn and what has been recovered and returned to the federation. Blockstream CEO Adam Back indicated that the 1:1 peg will ultimately be covered, though no timeline has been provided for when redemptions might restart or the reserve gap closed.
The duration and conditions for resuming normal peg-out functionality remain undefined. No update has been disclosed regarding the status of the security reviews or the recovery efforts for the outstanding bitcoin balance.