Liquid Network has resumed block production following a $320 million Bitcoin withdrawal from its federation wallet, the network announced Thursday.
Block production restarted "without transactions" as a precautionary measure while the network is monitored to confirm full stabilization, according to a post on X. Required updates to functionary and bridge nodes have been deployed, with functionary nodes now signing and validating blocks as intended.
Peg operations, including PAK-authorized peg-outs, remain suspended as the network works to restore its BTC/L-BTC reserve.
The network originally paused operations on Sept. 6 after actors claiming to be white-hat hackers withdrew approximately 4,000 Bitcoin — roughly 95% of the federation wallet's balance of about 4,200 BTC. The withdrawable L-BTC was generated through a bug in Elements, the open-source software underpinning Liquid, specifically tied to a proof-verification cache vulnerability.
A day after the exploit, Liquid released an emergency update — Elements v23.3.4 — which hardened cache keys used for range proofs as part of its recovery plan. Following confirmation from Blockstream that affected bridge nodes had been patched, the actors returned 3,400 BTC, worth approximately $270 million at the time.
As of Sept. 7, about 598 BTC valued at roughly $46 million remained outstanding and unreturned.
