Liquid Network Restarts Block Production After $320M Bitcoin Exploit

• Liquid Network restarted block production after patching its nodes, but it continues to halt transactions and Bitcoin peg operations.
• Hackers returned 3,400 BTC, but they still hold 598.5 BTC outside the federation wallet.

The Liquid Network has resumed block generation after the large Bitcoin withdrawal from its system. But users can’t perform transactions or cash out L-BTC at this time. This is because the resumption of block generation represents a cautious attempt to return to normalcy. Especially, after a hack attack that saw nearly $320 million of Bitcoin withdrawn from Liquid’s federation wallet. According to the Liquid network, functionaries now generate and validate blocks using the latest software upgrade on the functionary and bridge systems.

Liquid Restarts Blocks But Leaves Transfers Frozen

The partial liquidation process means that there is a separation between block generation and the entire transaction processing in the Liquid system. Hence, users can generate blocks, but they cannot perform normal transfers or use Bitcoin bridge services. Moreover, Liquid will also keep peg operations disabled. For example, even peg-out withdrawals authorized by Peg-out Authorization Keys will not be available until Liquid restores reserves that back the issued L-BTC. Normally, Liquid allows users to lock Bitcoin and receive equivalent L-BTC and then use them to withdraw Bitcoin from the bridge services controlled by federations.