Liquid narrows reserve shortfall to 600 BTC following test transfers

Following a test transfer, Liquid Network’s reserve shortfall has been reduced to approximately 600 BTC. Samson Mow, a member of the Liquid Federation, noted that the remaining funds are expected to be replenished within the next few days; however, per the recovery plan, direct redemption functionality will only be reinstated once reserves are fully backed by Bitcoin. This security incident stemmed from attackers exploiting a vulnerability in the rangeproof validation cache of the Elements platform to mint roughly 4,000 L-BTC without sufficient BTC collateral, then withdrawing approximately 4,000 BTC via SideSwap—a Federation member’s redemption channel. After the incident, the attacker returned 3,400 BTC; approximately 602 BTC remains under recovery.