On September 6, an attacker exploited a cache key collision flaw in Blockstream’s Elements software to generate nearly 4,000 unbacked L-BTC worth roughly $320 million and convert them into real Bitcoin via the peg-out mechanism, draining 95% of the Liquid Federation’s reserves. The federation’s reserve wallet dropped from over 4,200 BTC to approximately 197 BTC. Blockstream suspended peg operations and took the network offline for four days, deploying the Elements v23.3.4 patch on September 10. The attacker, identified as a white-hat researcher via Bitcoin OP_RETURN messages, returned roughly 3,400 BTC but retained 598.5 BTC, representing approximately 15% of the total recovered funds.
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