The Liquid Network has remained at 86% backing for over 35 days following an exploit of its Elements software that drained nearly 4,000 BTC from the protocol. While attackers have returned approximately 3,400 BTC, peg-out operations converting LBTC to bitcoin remain suspended as an independent external security audit of Elements v23.3.4 proceeds.
The attackers continue to hold 598.5 BTC, valued at $49.69 million as of October 11, 2026. According to reports, the attackers initially claimed to be white hat hackers and demanded a 10% bounty from Blockstream, the protocol's creator. Blockstream rejected this demand and called for immediate return of all funds. The attacker's wallet has since become the target of address-poisoning attempts and messages embedded in OP_RETURN transactions.
User Frustration Grows
Liquid Network users have expressed mounting frustration over the prolonged suspension of redemption services. One longtime Blockstream supporter stated on social media that the company's handling of the incident had eroded their confidence, citing sparse and inconsistent communications and noting that 14% of every LBTC holder's assets remain unrecovered.
Recovery Efforts Underway
On September 29, 2026, the Liquid Network announced that an independent external security audit was underway and that the Liquid Federation was coordinating updates to the PAK list, including replacement of existing entries and securing peg-out keys in cold storage.
Some LBTC holders have begun moving funds through alternative applications to exit their positions during the suspension, incurring spreads and fees in the process to regain access to their bitcoin.
