Liquid Network resumes block production after $320M Bitcoin withdrawal

Liquid Network announced that its functionary nodes have begun signing and validating blocks again, but transaction processing and peg operations remain disabled while the system is monitored.

Block production restored, transactions still paused

Functionary and bridge nodes received the required software updates and are now producing blocks as intended. The network is operating in a limited mode that allows developers to test the updated infrastructure without reopening transfers or exposing the peg system to new activity.

Emergency Elements update addresses proof‑verification flaw

One day before the restart, Liquid released Elements v23.3.4, which changes the cache keys used for validating range proofs. The previous cache allowed a proof‑verification result to be reused without sufficient transaction context, enabling an actor to create unbacked L‑BTC and withdraw Bitcoin from the federation wallet.

Partial repayment by the actors

After confirming that all nodes were patched, the actors returned 3,400 BTC to the federation wallet, restoring roughly 85 % of the withdrawn funds. About 598 BTC remain unrecovered.

Impact on users

While block production continues, users cannot send regular transactions on Liquid or move funds between Bitcoin and Liquid (peg‑in/peg‑out). The network has not provided a timeline for restoring these services.