Liquid Network hit by $320 million exploit

A critical bug in the Elements codebase allowed an unknown hacker to mint unbacked L BTC. By exploiting a range proof cache issue, the attacker drained 95 percent of the federation reserve through the SideSwap platform. The total value involved reached approximately $320 million.

Following the breach, the network was frozen to prevent further unauthorized activity. Interestingly, the attacker later signaled a willingness to return the stolen funds. Messages were sent directly on the blockchain using OP_RETURN commands to negotiate the recovery of the 598.5 BTC.

This incident highlights the security risks inherent in sidechain infrastructure. Traders should monitor the status of the Liquid Network as developers work to patch the vulnerability and recover the missing assets. The situation serves as a reminder to be cautious with cross chain bridges and federated networks.