Liquid Network has resumed block production in restricted mode after an Elements software flaw enabled unbacked L-BTC creation and the withdrawal of about 3,996 BTC, valued at roughly $320 million. The vulnerability affected proof-verification cache logic and allowed attackers to redeem L-BTC without depositing equivalent Bitcoin into Liquid's federation reserve. Actors identifying themselves as white-hat hackers returned 3,400 BTC after security patches were deployed, leaving approximately 598 BTC, worth about $46 million, unreturned. Elements v23.3.4 has been installed across functionary nodes and bridge infrastructure, but transaction processing and Bitcoin peg-out operations remain suspended while Liquid verifies network stability and addresses the reserve gap.