Liquid Network is nearing full restoration of its Bitcoin reserves following a security breach on September 6, 2026. An exploit in the Elements software allowed the unauthorized creation of approximately 4,000 L-BTC, causing reserves to drop from 4,205 BTC to 197 BTC. Attackers subsequently returned 3,400 BTC following negotiations.
As of October 27, 2026, the federation wallet holds roughly 3,649 BTC against 4,249 circulating L-BTC, representing 85.88% coverage. Samson Mow, CEO of JAN3, stated that the remaining 600 BTC shortfall will be covered by Blockstream in the coming days. A test transaction of 2.53048101 BTC was processed on October 27 to verify system operations.
Direct peg-outs from the Liquid network remain paused following an external security audit completed on October 20, 2026. Currently, users can only move assets via third-party swap services. Full 1:1 backing is a mandatory requirement for the federation to resume direct withdrawals, with Blockstream committing to cover the losses instead of socializing them among users.
