⚠️ LIQUID BITCOIN REDEMPTIONS STILL FROZEN 35 DAYS AFTER EXPLOIT

Bitcoin sidechain Liquid is still recovering from one of the largest security incidents in its history.

More than a month after the September exploit, users still cannot complete normal:

LBTC → BTC PEG-OUTS

The original attack exploited a vulnerability in Liquid's Elements software and allowed approximately:

4,000 UNBACKED LBTC

to be created.

Those assets were then used to withdraw nearly 4,000 real BTC from the federation reserve.

The attacker later returned approximately:

3,400 BTC

But roughly:

598.5 BTC

still remains outstanding.

As of October 11, peg-outs remained suspended while an independent security review continues.

Liquid's reserve backing is currently estimated at roughly:

86%

Important distinction:

This was NOT an exploit of Bitcoin itself.

Bitcoin's blockchain, consensus rules and BTC supply were not compromised.

The vulnerability existed inside Liquid's sidechain software.

Blockstream says the invalid inflation was removed from Liquid's corrected chain and the vulnerability has been patched.

But the reserve problem remains.

Liquid is designed around a simple promise:

1 LBTC = 1 BTC held in reserve.

Until the missing Bitcoin is restored or the reserve is otherwise made whole, normal redemptions cannot safely return.

Bitcoin remained intact.

The bridge built around it did not.

That distinction is exactly why layered Bitcoin systems need their own security assumptions.

@BitcoinNews