Liquid Network Security Incident Assessment

On September 6, 2026, an attacker exploited a vulnerability in Elements' rangeproof verification cache to create 4,000 unbacked LBTC and convert it to approximately 4,000 BTC through Liquid's peg-out process, reducing the network's Bitcoin reserve from 4,205 BTC to 197 BTC. Blockstream halted the network and deployed emergency patches within hours, and the attacker returned 3,400 BTC after negotiations, with approximately 602 BTC still outstanding. Other Liquid-issued assets like USDt remained unaffected by the incident, though they were unavailable while the network was paused.