Bitcoin News
By Jean-Luc Maracon
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How the Exploit Actually Worked. The flaw lived inside Elements, the open-source software that powers Liquid.
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Negotiations Over Bitcoin Transaction Messages. Here's the part that's genuinely strange. Blockstream and the actors didn't communicate through…
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What's Still Broken and What Comes Next. Liquid is keeping transactions disabled for now. The logic is straightforward — restarting blocks…
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Liquid Network is back producing blocks. Sort of. Transactions are still off, peg operations are frozen, and nearly 600 Bitcoin hasn't come back yet.
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The network confirmed its functionary nodes restarted block production after a staggering incident that saw roughly 3,996 BTC — about 95% of everything sitting in the federation…
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The peg operations — the mechanism users rely on to swap L-BTC back for real Bitcoin — remain suspended while the network works to rebuild its reserve.
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The flaw lived inside Elements, the open-source software that powers Liquid. Someone found a way to game the range proof validation system.
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Once the unbacked L-BTC existed, the actor pushed a peg-out through SideSwap. SideSwap's process treated the request as legitimate. Real Bitcoin left the federation wallet.
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Liquid's emergency fix came as Elements v23.3.4. The update changed how cache keys work during range proof validation, closing the hole that made reuse possible.
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The federation structure itself — 15 rotating functionaries, 11 signatures required to move any funds — didn't fail in the way you might expect. No signing key was stolen.
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Read also: Bitcoin Hits $79K as Golden Cross Sparks $100K Target with Fed Decision Looming
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The remaining 598.5 BTC — worth around $46 million — hasn't moved back. There's no public agreement covering it. Liquid hasn't called it a bounty.
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Ledger's CTO Charles Guillemet didn't mince words on the white-hat framing. He said the situation looks more like extortion than ethical security research.
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Liquid is keeping transactions disabled for now. The logic is straightforward — restarting blocks without enabling transactions lets developers watch the system under real…
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Related: Bitcoin Plummets Below $77,000 as Treasury Yields Surge to 5.353%
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