2026-09-06 · record inc_0002 · updated 2026-10-19
Liquid Network: about 4,000 unbacked L-BTC through a proof-cache flaw
A flaw in how Elements cached proof checks let an attacker create about 4,000 L-BTC with no BTC behind it and redeem it through a normal peg-out.
Liquid NetworkLiquidComponent: Elements confidential-transaction proof cache; peg-out process
- Event
- Official statement
- Root cause
- Official statement
- Loss
- Official statement
Current status
Peg-outs suspended; gap of about 600 BTC.
Timeline
- 2026-09-06 13:53 UTCAttacker transaction confirmed on Liquid.
- 2026-09-06 14:28 UTCFederation signers release about 3,996 BTC.
- 2026-09-07 16:09 UTCAttacker returns 3,400 BTC.
- 2026-09-09Elements v23.3.4 released with the hardened fix.
- 2026-09-23Assessment published.
Root cause
According to Blockstream's assessment, a cache key joined its fields without separators, so two different inputs could produce the same key and the proof check was skipped.
Basis: official post-mortem · verified by us against that source
Classes: Bridge and cross-chain verification
Impact: loss and recovery
Reserve fell from about 4,205 BTC to 197 BTC. Peg-outs reported suspended as of 17 October with a gap of about 600 BTC.
Reported loss
$32M (4,000 BTC)
USD basis: Credora USD estimate. Blockstream gives BTC amounts only.
Recovered or returned
$272M (partial)
About 602 BTC outstanding per the assessment. USD is Credora's estimate.
Loss and recovery are separate figures. They are never netted, and amounts in different currencies are never added together.
Addresses and transactions
No addresses or transaction hashes have been verified for this record. We do not publish unverified hashes.
Public reproduction file
No public reproduction file is recorded for this incident.
Remediation and defensive indicators
- Elements v23.3.4; review of governance and key management; staged recovery under test. (reported)
Defensive lessons from the class
- Add an independent solvency check outside the minting path.
- Cap mints and withdrawals per period.
Sources
Official post-mortem
Blockstream (Liquid blog): Liquid Network security incident assessment
Published 2026-09-23 · retrieved 2026-10-19
Independent analysis
Credora: Risk in DeFi, September post-mortem
retrieved 2026-10-19 · Source of the USD estimates.
Media report
CryptoBriefing: Liquid Network halts Bitcoin redemptions, reserve gap
Published 2026-10-11 · retrieved 2026-10-19
Media report
TokenPost: Liquid coverage ratio report
retrieved 2026-10-19
- UNCX Vesting V2: share records and token balance made to disagreeLinked by our editors
- Symbiosis Bitcoin Bridge: 46.1 billion unbacked syBTC from a 330-satoshi depositShared class: Bridge and cross-chain verification
Read the full written analysis
Method, uncertainty and corrections
Still unknown
- Who the attacker is
- Why about 602 BTC has not been returned
- When peg-outs resume
- Who funds the gap
Where sources disagree
- Amount outstanding: about 602 BTC (Blockstream), about 598.5 BTC (Credora), 598 to 603 BTC in later coverage.
- Speed of the drain differs between Credora and Blockstream's timeline.
Written by ThreatWire editorial. Facts attributed to the sources listed; figures are estimates and not independently verified unless marked on-chain. Published 2026-10-19, last updated 2026-10-19. Figures are estimates from public post-mortems and named analysts; not independently verified unless marked as confirmed on-chain.
No corrections recorded since publication.