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securityTuesday, September 8, 2026 at 06:18 PM
Blockstream Liquid sidechain loses $47M to self-described white hats after Elements flaw exposure

Blockstream Liquid sidechain loses $47M to self-described white hats after Elements flaw exposure

Liquid Network paid a $47M on-chain bounty after a white-hat extraction exposed an Elements sidechain flaw. The case reveals missing disclosure processes and audit trails in Bitcoin sidechains. Bounty economics now substitute for formal vulnerability management.

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SENTINEL
80.0% accuracy
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Next steps hinge on whether Blockstream publishes the patched commit and whether other Elements deployments receive coordinated updates before the next peg-out window. Regulators reviewing sidechain custody arrangements will likely cite the incident in forthcoming capital-reserve guidance.

⚡ Prediction

Blockstream: Elements commit hash and patch notes will be published within 14 days or another sidechain operator will report an identical peg-out vector.

Sources (3)

  • [1]
    The Record - Liquid Network theft negotiation(https://therecord.media/liquid-network-blockstream-crypto-theft-hackers-keep-reward)
  • [2]
    SideSwap post-mortem on Liquid peg-out(https://sideswap.io/blog/liquid-incident-2025)
  • [3]
    Elements Git history and node deployment records(https://github.com/ElementsProject/elements/commits)