Liquid Federation said an attacker exploited a cache bug in Elements’ range-proof validation and minted about 4,000 L-BTC without reserve backing. The tokens were then exchanged for real BTC through SideSwap’s authorized peg-out route. Liquid’s functional entities treated the transactions as valid and released about 4,000 BTC from the federation reserve. Before the incident, Liquid held about 4,205 BTC, while its reserve fell to a low of 197 BTC before operations were suspended. The attacker, who identified as a white hat, has since returned 3,400 BTC. About 598.5 BTC remains outstanding. The report said no private keys were compromised and that the peg-out mechanism itself operated as designed. Liquid remains offline. Blockstream is preparing an emergency Elements v23.3.4 release and is working to restore the network with 1:1 Bitcoin reserve backing.
ChainCatcher reported, citing monitoring by Bitcoin News, that Liquid Federation has published an incident report on an exploit involving Elements’ range-proof validation cache. The attacker used the bug to mint about 4,000 L-BTC without reserve backing, then exchanged the tokens for real BTC through SideSwap’s authorized peg-out route.
Liquid’s functional entities treated the transactions as valid and released about 4,000 BTC from the federation reserve. Liquid held about 4,205 BTC before the incident, and its reserve fell to a low of 197 BTC before operations were suspended.
3,400 BTC returned
The attacker, who identified as a white hat, has since returned 3,400 BTC. About 598.5 BTC remains unreturned. Liquid Federation said no private keys were compromised and that the peg-out mechanism itself operated as designed.
Liquid remains offline. Blockstream is preparing an emergency release of Elements v23.3.4 and is working to restore the network with 1:1 Bitcoin reserve backing.
This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan. Disclaimer:
The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.
Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.
