Liquid Network Restarts Blocks After $320M Bitcoin Exploit

Liquid Network resumed block production on Sept. 10, 2026, after deploying emergency software updates following the withdrawal of approximately 4,000 Bitcoin, worth about $320 million, from the network’s federation wallet. Functionary and bridge nodes received the required updates, and functionary nodes are now signing and validating blocks as intended. However, Liquid said block production restarted without transactions while the network remains under observation to confirm full stabilization.

Transactions and peg operations remain suspended, including PAK-authorized peg-outs, as Liquid works to restore its BTC and L-BTC reserve. The incident began on Sept. 6 when actors claiming to be white-hat hackers exploited a vulnerability in Elements, the open-source software underlying Liquid. The attackers withdrew about 95% of the wallet’s roughly 4,200 BTC balance.

Liquid released Elements v23.3.4 to address the proof-verification cache vulnerability. The update hardened cache keys used for range proofs, while Blockstream confirmed that affected bridge nodes had been patched. Of the stolen Bitcoin, approximately 3,400 BTC, valued at around $270 million at the time, has been returned.

About 598 BTC, worth roughly $46 million at current prices, remained outstanding as of Sept. 7. The block-production restart marks progress in Liquid’s recovery, but the continuing suspension of transactions and peg operations highlights that the network has not yet returned to normal service.