Liquid Network Extends LBTC Redemption Freeze as Exploiter Retains 598 Bitcoin
Liquid Network has maintained a freeze on LBTC redemptions for 35 days after an exploit linked to a flaw in the Elements software. Attackers initially moved almost 4,000 bitcoin before returning approximately 3,400 tokens. The perpetrators continue to hold 598.5 bitcoin, valued at $49.69 million, while Bitcoin (BITSTAMP:BTCUSD) traded at $83,560, down 0.14% on the day. Blockstream refused the attackers' demand for a 10% bounty and demanded the immediate return of the remaining funds.
The ongoing lockup leaves investors with restricted access to their assets and highlights operational risks within sidechain bridges. Without direct redemptions, some users have turned to alternative liquidity venues such as Sideswap and Sideshift.ai to exit positions. However, tight liquidity has dragged out transfers for weeks and imposed heavy execution costs, with combined fees and spreads reaching roughly 5%.
No official timeline has been announced for reopening LBTC redemptions. To address security concerns, Liquid Network is conducting an independent external audit of Elements version 23.3.4. Meanwhile, the Liquid Federation is updating its key authorization records and moving all redemption keys to cold storage to safeguard the protocol before resuming normal operations.
Key points
- Liquid Network extended its freeze on LBTC redemptions to 35 days following a security exploit in Elements software.
- Attackers returned about 3,400 of the nearly 4,000 stolen bitcoin but still hold 598.5 bitcoin worth $49.69 million.
- Blockstream rejected a 10% bounty demand from the attackers and demanded the immediate return of the assets.
- LBTC holders face high friction using third-party apps, reporting multi-week delays and total costs near 5%.
- An independent security audit of Elements v23.3.4 is underway while redemption keys are moved to cold storage.
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How we writeDisclaimerQuestions and answers
Why are Liquid Network LBTC redemptions paused?
Redemptions were paused after attackers exploited a flaw in Elements software to transfer nearly 4,000 bitcoin. Although the attackers returned around 3,400 bitcoin, they still hold 598.5 bitcoin, prompting an ongoing security audit and protocol updates.
How much bitcoin was stolen in the Liquid Network attack?
Attackers initially transferred nearly 4,000 bitcoin. They later returned approximately 3,400 bitcoin but still retain 598.5 bitcoin, valued at $49.69 million.
When will Liquid Network resume LBTC redemptions?
No date has been set for resuming redemptions. Liquid Network is awaiting the completion of an external security audit of Elements v23.3.4 and moving redemption keys to cold storage before reopening transfers.