The Liquid Network has resumed block creation after approximately 4,000 BTC worth around $320 million was withdrawn. However, transactions and pegged operations remain suspended during the recovery of the network and its BTC/L-BTC reserves.
On Thursday, Liquid announced on X that blocks are being created again "without transactions." This mode has been implemented as a precautionary measure while the team monitors the network's performance and checks its stability. Necessary updates for functional and bridge nodes have already been deployed, and functional nodes are once again correctly signing and validating blocks.
Pegged operations, including authorized PAK withdrawals, remain disabled. According to Liquid, this is due to the ongoing recovery of the BTC/L-BTC reserve. The day before, the network released an emergency update for Elements – the software underlying Liquid. The Elements v2334 version addresses a vulnerability in the proof verification cache that was linked to the incident and strengthens the cache keys used for range proofs.
Liquid halted operations on September 6 after individuals identifying themselves as white hat hackers withdrew approximately 4,000 BTC worth around $320 million from the federated wallet. The withdrawal volume accounted for about 95% of the wallet's balance, which was estimated at around 4,200 BTC. Among the withdrawn assets was L-BTC, whose origin is associated with a bug in Elements. Subsequently, the attackers returned approximately 3,400 BTC worth around $270 million at that time. This occurred after Blockstream confirmed the update of the affected bridge nodes.