Alpen Labs says AI traced Liquid sidechain exploit in an hour after $320M Bitcoin loss

On September 6, 2026, Liquid’s federation released roughly 3,996 BTC after accepting L-BTC lacking Bitcoin backing. A valid withdrawal turned the invalid sidechain state into a real Bitcoin payment worth about $320 million. Alpen Labs CEO Simanta Gautam says his AI agents reproduced the flaw locally in about an hour, tracing the issue after the attack. A September 22 report details a failed proof check and a code change that concatenated cache fields as raw bytes without encoding boundaries, allowing a valid seed proof and an invalid target to produce identical cache input.