Liquid Network Resumes Block Production Following $320M Security Incident

The Liquid Network has resumed block production after last week’s $320 million Bitcoin withdrawal, though transactions and peg operations remain suspended as a precautionary measure while the network continues monitoring for full stabilization. Updates to the network’s functionary and bridge nodes have been deployed, allowing these nodes to resume signing and validating blocks as intended.

Software Patch Addresses Root Vulnerability

A day before resuming block production, Liquid released an emergency software update targeting the proof-verification cache vulnerability linked to the incident, hardening the cache keys used in the network’s cryptographic range proofs as part of its broader recovery effort. Peg operations, including authorized peg-outs, remain paused while the network works to restore its full bitcoin reserve backing.

Majority of Stolen Funds Already Recovered

The network initially paused operations after actors claiming to be white-hat hackers withdrew roughly 4,000 bitcoin, representing about 95% of the federation wallet’s holdings, in an incident tied to a bug in the network’s underlying software. Following confirmation that affected nodes had been patched, the attackers returned the majority of the funds, worth approximately $270 million at the time, with roughly $46 million worth of bitcoin still outstanding as of last week.