Liquid Network resumes operations but peg-outs remain suspended

Liquid Network has not fully recovered from the $320 million exploit, despite resuming core activity. The network restarted block production and regular transactions after deploying an emergency Elements software update. However, BTC peg-outs remain disabled while operators complete the recovery process.

Attackers withdrew about 4,000 BTC on September 6 by exploiting a vulnerability in Elements software that allowed unbacked L-BTC to pass validation. They later returned 3,400 BTC after Blockstream confirmed that affected bridge nodes had been patched. About 598.5 BTC remains outstanding, meaning the federation has not recovered the full amount involved in the exploit.

Liquid’s recovery plan now focuses on restoring the network’s corrected state and ensuring the BTC/L-BTC reserve is properly backed. The emergency Elements v23.3.4 release addresses the proof-verification cache vulnerability. Liquid has not yet announced that peg-outs have resumed, so the network should be viewed as partially restored rather than fully operational.