Liquid Hackers Return 3,400 Bitcoin Taken via Elements Bug, Still Holding $47M in BTC

On September 6, 2026, approximately 4,000 bitcoin (worth ~$320M) were withdrawn from the Liquid Network's federation wallet due to a bug in the Elements software underlying the sidechain. The attackers, who claim to be white hats, returned 3,400 bitcoin after confirming that Blockstream had patched its systems, but are still holding 598.5 bitcoin (~$47M). The exploit leveraged the SideSwap Peg-out Authorization Key to initiate a peg-out without compromising any private keys, suggesting a flaw in logic or validation within the Elements codebase. Communications occurred on-chain, including a PGP-encrypted message sent via a microtransaction, and the incident remains unresolved as the network stays offline.

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