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Liquid Network Restores Bitcoin After $320M White-Hat Hack

Liquid Network Restores Bitcoin After $320M White-Hat Hack

First seen 3 Nov 2026, 12:42 UTC • •
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ThreatCluster AI
ThreatCluster •November 3, 2026 at 18:16 UTC
  • •Liquid Network restored 1:1 Bitcoin backing for all LBTC after a $320M exploit.
  • •The exploit involved a bug in Elements, not a compromise of the peg-out key.
  • •New security measures and governance updates are being implemented to prevent future incidents.

The Liquid Network has restored its Bitcoin reserves to a 1:1 backing for all LBTC, following a significant exploit on September 6, 2026, where purported white-hat hackers withdrew 4,000 BTC (approximately $320 million) from its federation wallet. The incident was attributed to a bug in Elements, not a compromise of SideSwap's peg-out key. Blockstream's CEO confirmed that the network's reserves are now fully matched, with no deficit. Liquid has implemented new security measures, including updated authorization keys and hardened consensus rules, to prevent future incidents. The federation is also modernizing its governance structure and enhancing oversight. The funds withdrawn during the hack remain under investigation, and the network has undergone multiple audits since the incident.

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Timeline

2026-09-06
4,000 BTC withdrawn from Liquid wallet
Purported white-hat hackers withdrew 4,000 BTC worth approximately $320 million using SideSwap's peg-out key, attributed to a bug in Elements.
decrypt.co
2026-11-03
Liquid Network announces full Bitcoin backing restored
Liquid Federation confirmed that Bitcoin reserves are fully restored to a 1:1 backing for LBTC, with no deficit reported.
Finance.Yahoo

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Common questions

What caused the Bitcoin withdrawal?
The withdrawal was due to a bug in Elements that allowed the hackers to exploit the system without compromising any keys.
How is Liquid Network preventing future hacks?
Liquid has implemented new security measures, including updated authorization keys and hardened consensus rules.
What is the current status of the withdrawn funds?
The withdrawn funds remain under investigation, and the network has restored its reserves to a full backing.