Liquid Hackers Return 3,400 Bitcoin Taken via Elements Bug, Still Holding $47M in BTC
- ID
- 22433
- Status
- summarized
- Published
- 08 Sep 2026, 10:54 PM
- Fetched
- 09 Sep 2026, 12:33 AM
- Provider
- The Hacker News
- Category
- security
- Original URL
- https://thehackernews.com/2026/09/liquid-hackers-return-3400-bitcoin.html
- Source URL
- https://feeds.feedburner.com/TheHackersNews
Summary
- Score
- 3.0
- Created
- 09 Sep 2026, 12:44 AM
- Tags
- Audience
- developers
What happened
Hackers exploited a bug in Elements, the software underlying the Liquid Network Bitcoin sidechain, to withdraw roughly 4,000 BTC (~$320M) — about 95% of Liquid's reported reserves — using SideSwap's Peg-out Authorization Key on September 6, 2026. They returned 3,400 BTC the next day via an on-chain transaction, leaving 598.5 BTC (~$47M) unreturned as change. Neither Blockstream nor Liquid has disclosed the specific Elements flaw, and the network remains paused, preventing L-BTC holders from converting back to bitcoin.
Why it matters
If you build on or hold assets via Liquid Network or any Elements-based sidechain, withdrawals are currently frozen and the underlying bug has not been publicly patched or described. For everyone else, this is a cautionary tale about sidechain peg-out mechanisms and the risk of a single software bug draining 95% of reserves — but it does not require action from builders outside the Bitcoin sidechain ecosystem.
Discussion angle
The attackers communicated via on-chain messages and returned most funds claiming white-hat status — worth discussing whether on-chain negotiation is becoming a standard post-exploitation playbook, and what that means for incident response in crypto infrastructure.