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Liquid Network Peg-Out Operations Suspended After Security Incident

Liquid Network Peg-Out Operations Suspended After Security Incident

First seen 30 Sep 2026, 00:05 UTC • •
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ThreatCluster AI
ThreatCluster •September 30, 2026 at 00:06 UTC
  • •Liquid Network suspended peg-out operations after a September 6 security incident.
  • •Attackers exploited a vulnerability to withdraw 4,000 unbacked LBTC.
  • •An external audit and PAK updates are underway to enhance security.

The Liquid Network is working to restore peg-out operations following a security incident on September 6, 2026, where attackers exploited a software vulnerability to withdraw approximately 4,000 unbacked LBTC. An external security audit of Elements v23.3.4 has been initiated to ensure the integrity of the system before resuming peg-outs. The Liquid Federation is also updating its Peg Out Authorization Key (PAK) list and securing Bitcoin receiving keys in cold storage. While normal transactions have resumed, peg-outs remain suspended, and no specific date for resumption has been provided. The vulnerability was linked to how Elements caches proof validation results, leading to a consensus defect. Liquid has implemented fixes in Elements v23.3.4 to address these issues, but a second problem related to the cache key field combination still exists. Further updates on recovery progress are expected soon.

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Timeline

2026-09-06
Security incident occurs
Attackers exploit a vulnerability in Elements, withdrawing approximately 4,000 unbacked LBTC from reserves.
Kucoin
2026-09-28
Liquid Network updates on recovery efforts
An external security audit of Elements v23.3.4 is initiated, and updates to the Peg Out Authorization Key list are announced.
Kucoin
2026-09-29
Normal transactions resume
Liquid Network resumes normal transactions, but peg-outs remain suspended as security measures are implemented.
Pluang

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