Attackers exploited a range-proof cache-key vulnerability in the Elements software used by Blockstream's Liquid Network on Sept. 6, withdrawing about 3,998.5 BTC from federation reserves after creating unbacked L-BTC and converting it through SideSwap's peg-out service. The actors returned 3,400 BTC, or about 85% of the withdrawn amount, while about 598.5 BTC worth approximately $47 million remained associated with them; SideSwap separately returned about 4 BTC in fees. After affected Functionary and bridge nodes were updated, Liquid entered controlled recovery at 10:00 UTC on Sept. 10, restoring block production but not transaction processing. Peg-outs, including PAK-authorized peg-outs, remained suspended while the network monitored stability and worked to restore BTC/LBTC reserves.