Liquid Federation Discloses Details of 4,000 BTC Vulnerability Incident

The Liquid Federation released an incident report detailing how an attacker exploited a vulnerability in the Elements range proof verification cache to mint approximately 4,000 unbacked L-BTC. These tokens were then converted into real BTC via an authorized exit-peg path on SideSwap. The Liquid functionary treated the transactions as valid, releasing about 4,000 BTC from the federation's reserves. Before the incident, Liquid held approximately 4,205 BTC, with reserves dropping to a low of 197 BTC before operations were suspended.