Liquid Network Restarts Blocks After $320M Bitcoin Exploit, Pegs Still Frozen

Key Takeaways:

• After emergency updates, Liquid Network has restarted generating blocks but no transactions have been added.
• Peg-ins and peg-outs are suspended during recovery of the BTC/LBTC reserve.
• Blockstream notes functionary and bridge node updates are deployed and network monitoring going on.

User Score

8.7

Liquid Network is in a controlled recovery process as a result of an incident that led to the suspension of Liquid Network operations. However, users can also not yet transact and move bitcoin through the network’s peg system, and blocks are now being produced once more.

Read More: Liquid Network Pauses After 4,000 BTC Worth $320M Pulled in White-Hat Incident

Liquid Network said on September 10 that block production had restarted as a precautionary step. The network is currently producing blocks without transactions, allowing operators to monitor system behavior before restoring normal activity.

LIQUID NETWORK UPDATE: OPERATIONS RESUMED, RECOVERY ONGOING
Status as of September 10, 2026, 10:00 UTC

Recovery Status

The Liquid Network has entered the next phase of its controlled resumption. As a precautionary measure, block production has resumed without transactions while… https://t.co/PbyBXIzdQc

— Liquid Network 🌊 (@Liquid_BTC) September 10, 2026

Blockstream has updated all Liquid’s functionary and bridge nodes. Key steps have been taken towards recovery by now including the signing and validation of blocks by functionary nodes.

The restart doesn’t necessarily signal Liquid is fully up and going though. Transaction activity continues to be limited in the network with operators confirming the stability of the network infrastructure.

All operations related to the peg are also disabled. This includes peg-outs authorized by PAK, intended for transferring assets from Liquid back to the Bitcoin network.

The rest of the project of recovery focuses on restoring the asset backup of Liquid’s Bitcoin-based asset L-BTC.

Liquid’s update didn’t offer a fresh estimate for the number of Bitcoins that remain unclaimed from the incident. Previous indications indicated that about 4,000 BTCs were milled from the federation wallet, which housed the majority of the wallet’s assets.

The attack triggered Liquid and Blockstream to roll out the emergency soft fixes prior to the restarting of a portion of the Liquid network. The reaction has been on securing the infrastructure and preventing the vulnerability in the exploit from being reused.

Now that the network is recovering from the incident, Liquid also warned about fraudulent websites and messages.

The network said they are trying to take advantage of the situation with fake updates and recovery attempts. Only official Liquid Network and Blockstream channels were recommended for users to use.

Earlier, Liquid said users should not send funds or private keys and seed phrases in reply to unsolicited messages. This is especially crucial at the time of peg operations, when users might experience fake promises about the restorations of withdrawals or recovery services.

Security researchers and broader members of the Bitcoin community are also helping to assist in the incident. Liquid and Blockstream congratulated those who played a role in the restoration process, however, emphasizing the importance of keeping it safe.

Liquid’s recovery is currently in stages: the blockchain is now being produced under limited conditions, node infrastructure has been upgraded, transactions and Bitcoin peg operations are still offline.

Full functionality will be contingent upon the completion of the re-stabilization of the reserve and additional confirmation that the network is re-stabilized.

Read More: BounceBit Shuts Down Layer 1 After an Authorization Exploit

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