Liquid Federation reports ~4,000 BTC minted via bug, reserves fell to 197 BTC

TREE NEWS update: Liquid Federation disclosed that attackers exploited an Elements range-proof validation cache bug to mint ~4,000 unbacked L-BTC, later swapped for real BTC via SideSwap’s authorized exit peg. Before the incident, Liquid held ~4,205 BTC; reserves dropped to 197 BTC before operations paused. A self-described white hat returned 3,400 BTC, leaving ~598.5 BTC unrecovered. No private keys were compromised. Liquid remains offline, with Blockstream preparing Elements v23.3.4 and working to restore the network with 1:1 BTC backing.