Why securing private keys is not enough to prevent crypto theft

On September 6, nearly 4,000 Bitcoin were withdrawn from the Liquid reserve due to a software vulnerability rather than a private key compromise. Attackers exploited a flaw to mint L-BTC without backing, subsequently exchanging them for real Bitcoin. This incident highlights that even with secure private keys, software errors can authorize fraudulent transactions. The report notes that insurance coverage for such platforms may not guarantee full recovery for affected customers, raising questions about financial protection in the event of such exploits.