Seems that an Elements rangeproof cache bug may've gotten exploited. Fix for suspicious issue was committed just last week and attackers could've monitored the public commits and exploited the bug before fix was ever pushed?
Sort of self-fulfilling prophecy if true, that's a leading theory anyhow.
fix: range proof cache bind to asset and scriptpubkey
There’s kind of an interesting thread here about open source, which is usually thought of as more secure because of more eyes on the code, actually being less secure because an accidental merge can be exploited instantly with LLM’s monitoring. Is there a lot more security value in obscurity than before?
I've seen people in real life still pushing for crypto. Believe it or not they already got burned a couple of times, but somehow they think that with the next crypto they'll be at the top of the pyramid chain and able to cash out. They don't understand crypto currencies technically, nor that they are always going to be at the bottom of the pyramid no matter how many times they are burned.
Some of these people with the moral integrity of "quick buck at everyone else's expense" maybe won't stop until they go bankrupt or severly in debt. Might be a self-selective environment at this point.
This is funny. Is this analogous to finding a wallet on the street and returning it (in my locale: and getting a finders fee), or is this analogous to taking a wallet from a drunk sleeping person (morally dubious), contacting them the day after to return the wallet, or is it just stealing per se.
Where I live it's only theft if there is an intention to unlawfully take ownership of the good. As an example, forgetting to pay in a supermarket lies exactly on that boundary. Take a cart or hide a product and you won't get away. Try to pay, payment fails and you don't notice, walk away and get apprehended and you might convince the judge that you had no intention to unlawfully take ownership.
> This is funny. Is this analogous to finding a wallet on the street and returning it (in my locale: and getting a finders fee), or is this analogous to taking a wallet from a drunk sleeping person (morally dubious), contacting them the day after to return the wallet, or is it just stealing per se.
Kind of in-between I'd say. You find a wallet, on a bench, next to sleeping person, and you see lots of other people eying the wallet to take for themselves. You take the wallet to prevent others from taking it essentially.
Not saying these people for sure are whitehats/grayhats, who knows until the funds are returned, but that's basically how grayhatters see themselves.
BTC Liquid Network is not decentralized and does not purport to be. It's a federated sidechain, that is... it's a blockchain that runs alongside the Bitcoin blockchain (using a two-way peg that lock real BTC on the Bitcoin blockchain and issues an equivalent amount of Liquid BTC on the Liquid sidechain) but blocks can only be added to the Liquid Network sidechain by some of the handpicked members of the federation.
You are conflating the original BTC network and a lot of the other projects in the cryptocurrency / token / stable currency space.
Every time there was a new token that was 80% reminded or was governed by a central company, the original cryptocurrency enthusiasts cried fowl.
Most people don't read the fine print, don't read the founding white papers, and don't care about the differences between the protocols and the networks when they should.
I think it's more that the 'original cryptocurrency enthusiasts' tend to look the other way, because the more of these weird shitcoins/nfts/networks get minted, the more their numbers go up.
It's 2026. Show of hands, who here actually uses any of this, and why?
I worked at blockstream back in 2017 and developed the original cryptographic range proofs which are the ancestors some of the involved code here. However, the vulnerabilities here and the whole liquid product as it exists today postdates my involvement in the company (while I was there it was under initial development but envisioned quite differently than what they eventually did), and I haven't followed any of it closely since.
But I gave this issue a quick look based on the transactions and github history.
Underlying issue was related to validation caching. Signatures and proofs are expensive to validate, to improve performance and prevent certain DOS attacks their validation is cached. It's important that the key used in the cache capture everything that goes into the validation decision (though to prevent some attacks its important not too much goes into the key, or an attacker can flood with valid proof attacked to insignificantly different transactions).
It appears to me that there was a longstanding vulnerability-- stemming back to the introduction of multiple-asset-support-- which could cause a consensus split/ddos. But on a lazy review I can't come up with any way of translating it into theft. I see how someone could make an invalid transaction that would be falsely accepted by nodes that have cache state from a constructed prior transaction, but the ways I can come up with results in the invalid transaction just burning assets--- not directly very useful. [Big asterisks on the non obviously exploitable here, I've only thought about it for a minute or two and I really know fairly little about assets support in Liquid-- but exploiting it would require being able to create a fake 'shadow' asset with the a generator that is the negation of a real asset.]
In any case: This was recently fixed, but the "fix" introduced a hash collision vulnerability: The new fields added to the hash were not delimited. Failing to include type information like lengths in hashes is a perennial problem in cryptographic protocols.
Imagine you have a protocol where you sign a {comment, command} tuple, each a string. If the protocol computes the hash by just concating the command and comment and they're variable length fields, then you could get a signature of {"boring comment containing dangerous command", "boring command"} but then present it to someone as {"boring comment containing ","dangerous command boring command"} and have the signature pass. That sort of thing.
This new vulnerability has a somewhat straight forward path to exploitation and prints funds out of thin air.
Based on some of the public comments about nodes rejecting the attack transaction, I'm guessing they rolled out the "fix" to the federation in advance of publishing the changes because they seem to have accepted an attack that everyone else was still rejecting.
Advanced private deployment of a 'fix' might have gave them the confidence to drop the fix on github with little fanfare as it was "already fixed", but doing so painted a target on the issue that remained. Interestingly, off the shelf open weight AI like Kimi K3 immediately identify the new vulnerability without any particularly artful prompting. Makes me wonder if "safe" AI played a role in the introduction of the new, more serious, vulnerability.
I'm going to guess that anyone who actually knows more has their hands busy dealing with the return of the funds. I'm not sure if anyone has ever taken and then returned 1/3rd of a billion dollars worth of assets before.
I'm told by someone who threw AI at it that there may be a way to exploit the initial longstanding vulnerability by counting on the fact that updates to validation cache are non-atomic: You can make an invalid transaction that primes the cache before its rejected. But that these priming transactions can't propagate in the network (because they're invalid)... so getting them to the parties that need to sign the blocks might have been impractical to exploit.
There are always complaints on here about how Google is only paying $X for vulns. One advantage of decentralized digital money is that its bug bounties are self funding and the payout amount researcher-controlled.
I'm not sure if there is actually any evidence of this? Criminals do very well without crypto. If you look at percent of the economy that is fraudulent, it is quite large. If you look at percentage of crypto economy that is fraudulent, it is surprisingly similar
Plenty, search for cases of ransomware for example, you will find hundreds of instances where they demand payment by cryptocurrency, at least 1B per year.
Great, blog spam comments on HN now? Where is the "Cry that no independent regulator audited their systems and that the transactions were not reversible" coming from? Neither the Twitter thread nor the HN comments even mention anything about this, just the typical argument against yourself?
You can have smart wallets with reversible transactions. Even chargeback systems where both sides agree on a neutral judge to decide who's right. It takes time to set it up in a way that's secure, low cost and has good UX, but it's definitely possible.
Of course you need to use a well designed network like Ethereum or Solana for that, not a random Bitcoin sidechain controlled by a committee of BTC miners and shady VCs. This is a problem with Liquid not DeFi.
> I am just saying that this would not happened with a normal bank
Ok, but who were you quoting before? I too see how polarized your view seems to be, given you started this conversation with arguing against yourself for some reason.
Generally, we use quotes here for actual quotes, not quoting stuff we've read in other newspapers or on reddit or whatever, but real verbatim quotes.
I think it used to be a proper guidelines back in the day, or at least people got really up in their arms if you used quote syntax for things that weren't actually verbatim quotes.
But besides that, what's the point? Why share other's viewpoints you don't even agree with, so you can argue against them yourself? Why not wait until someone who actually has those viewpoints, share them? Or even better, why not just say nothing at all?
In a rug pull, the thing you own (usually some kind of digital asset) goes down in value, leaving you with less money than you started with, whereas theft leaves you no longer possessing the asset itself.
A few extra steps. Usually, the rug pull doesn't involve directly taking something that belongs to other people, but instead, selling your own thing in a dishonest way.
That's always a possibility, and I'm sure it has happened a lot. I would suspect with the size of liquid it's more likely it was an exploit, but either way I don't think we'll ever know!
I mean of course it was. Everything in this whole ludicrous space is a scam of one kind or another. It's amazing to me that this is still even a point of discussion. It's obviously a rug pull.
Are you thinking of ETH? All the bitcoin classic forks are over various aspect of network rules (eg. block size or block reward), not to roll back a transaction like ETH classic.
Seems that an Elements rangeproof cache bug may've gotten exploited. Fix for suspicious issue was committed just last week and attackers could've monitored the public commits and exploited the bug before fix was ever pushed?
Sort of self-fulfilling prophecy if true, that's a leading theory anyhow.
fix: range proof cache bind to asset and scriptpubkey
https://github.com/ElementsProject/elements/commit/c26d719c2...
It appears this commit actually introduced the bug the attacker exploited by adding additional flexibility for cache key confusion via scriptPubKey. https://twitter.com/mononautical/status/2096928595432374706
The mechanism reminds me of this classic AWS request signature forgery bug from 2008: https://news.ycombinator.com/item?id=401876
lmao, PR description says:
> Fixes a number of small issues picked up during LLM scans
There’s kind of an interesting thread here about open source, which is usually thought of as more secure because of more eyes on the code, actually being less secure because an accidental merge can be exploited instantly with LLM’s monitoring. Is there a lot more security value in obscurity than before?
false security. if there aren't LLM's monitoring patches with disassembler MCPs ready, there will be soon.
Maybe there's a middle ground where the code itself is only made visible at the same time as the latest build.
This shortens the exploit window
There are some projects that only release sources as a flat tarball at the same time as a new release, no git history/repo is available.
Crypto is total scam, lives of many people have been destroyed, it only works until it runs out of fools.
How many forks and psyops until people realize?
> it only works until it runs out of fools.
And given the world will never run out of fools, you're actually saying cryptocurrencies will continue working forever?
I've seen people in real life still pushing for crypto. Believe it or not they already got burned a couple of times, but somehow they think that with the next crypto they'll be at the top of the pyramid chain and able to cash out. They don't understand crypto currencies technically, nor that they are always going to be at the bottom of the pyramid no matter how many times they are burned.
Some of these people with the moral integrity of "quick buck at everyone else's expense" maybe won't stop until they go bankrupt or severly in debt. Might be a self-selective environment at this point.
They create forks to supress the real issue like adam back's island visit, they are total scams.
People need to call them for what they are.
Why do they say it's white hat hackers?
While moving the funds, the attackers left an OP_RETURN message with the text "we are whitehats. contact us on chain" https://mempool.space/tx/c103de95817b43f2df635ec6f35ff126ca2...
Further on-chain communications:
https://mempool.space/tx/91271efcbb5ab29abfc38ae635f0644e3ba... "Please contact security@blockstream.com"
https://mempool.space/tx/bd81219691eb1e22475c5985d847fa888c3... from Blockstream, unknown PGP message
https://mempool.space/tx/3a3eac4a26395b8c2563aaf1eb8b1b77798... from attackers, "sending most back to bc1qdlld6antmv4xug242ed83q7k4rqw50cwfns38szx4qu2f4jwaxxsuhwxxr, is that ok"
https://mempool.space/tx/8a444eed65c4584f138e08ee138f61490ef... from Blockstream, PGP-signed "Yes, thank you."
https://mempool.space/tx/83825b2135dd0abac12c9dfe17f29ab81b3... from attackers, "Please fix the bug first. The chain is under risk at latest commit right now. Make sure every node is patched. Then we will transfer the money back safely after confirming the fix. The detail is as follows (encrypted using https://blockstream.com/pgp.txt)." with unknown PGP-encrypted payload
As of writing, no response from Blockstream, and funds are still controlled by the attackers.
Purported white-hat hackers. The implication is that these people are presumably describing themselves as such, but it may not actually be true.
I can imagine one’s hat changing color when faced with a pot that big…
This is funny. Is this analogous to finding a wallet on the street and returning it (in my locale: and getting a finders fee), or is this analogous to taking a wallet from a drunk sleeping person (morally dubious), contacting them the day after to return the wallet, or is it just stealing per se.
Where I live it's only theft if there is an intention to unlawfully take ownership of the good. As an example, forgetting to pay in a supermarket lies exactly on that boundary. Take a cart or hide a product and you won't get away. Try to pay, payment fails and you don't notice, walk away and get apprehended and you might convince the judge that you had no intention to unlawfully take ownership.
> This is funny. Is this analogous to finding a wallet on the street and returning it (in my locale: and getting a finders fee), or is this analogous to taking a wallet from a drunk sleeping person (morally dubious), contacting them the day after to return the wallet, or is it just stealing per se.
Kind of in-between I'd say. You find a wallet, on a bench, next to sleeping person, and you see lots of other people eying the wallet to take for themselves. You take the wallet to prevent others from taking it essentially.
Not saying these people for sure are whitehats/grayhats, who knows until the funds are returned, but that's basically how grayhatters see themselves.
Well, exploits are different than sticky fingers. Those white hats could claim they raided preventatively.
The same reason scam artists describe themselves as businessmen
Presumably to try and reduce the chance of a mass panic among their users.
9 times out of 10 when an exchange or broker is "hacked" its been the operators of the exchange.
You have worded this like a fact, but this is your opinion.
It's just another psyop to accomplish some job by bitcoiners for bitcoiners.
What do they care if there's a panic? They have "paused the sidechain". No one can act on their panic.
Wasn't this all supposed to be decentralized? How can a foundation choose to unilaterally "pause the sidechain"?
BTC Liquid Network is not decentralized and does not purport to be. It's a federated sidechain, that is... it's a blockchain that runs alongside the Bitcoin blockchain (using a two-way peg that lock real BTC on the Bitcoin blockchain and issues an equivalent amount of Liquid BTC on the Liquid sidechain) but blocks can only be added to the Liquid Network sidechain by some of the handpicked members of the federation.
You are conflating the original BTC network and a lot of the other projects in the cryptocurrency / token / stable currency space.
Every time there was a new token that was 80% reminded or was governed by a central company, the original cryptocurrency enthusiasts cried fowl.
Most people don't read the fine print, don't read the founding white papers, and don't care about the differences between the protocols and the networks when they should.
I think it's more that the 'original cryptocurrency enthusiasts' tend to look the other way, because the more of these weird shitcoins/nfts/networks get minted, the more their numbers go up.
It's 2026. Show of hands, who here actually uses any of this, and why?
I worked at blockstream back in 2017 and developed the original cryptographic range proofs which are the ancestors some of the involved code here. However, the vulnerabilities here and the whole liquid product as it exists today postdates my involvement in the company (while I was there it was under initial development but envisioned quite differently than what they eventually did), and I haven't followed any of it closely since.
But I gave this issue a quick look based on the transactions and github history.
Underlying issue was related to validation caching. Signatures and proofs are expensive to validate, to improve performance and prevent certain DOS attacks their validation is cached. It's important that the key used in the cache capture everything that goes into the validation decision (though to prevent some attacks its important not too much goes into the key, or an attacker can flood with valid proof attacked to insignificantly different transactions).
It appears to me that there was a longstanding vulnerability-- stemming back to the introduction of multiple-asset-support-- which could cause a consensus split/ddos. But on a lazy review I can't come up with any way of translating it into theft. I see how someone could make an invalid transaction that would be falsely accepted by nodes that have cache state from a constructed prior transaction, but the ways I can come up with results in the invalid transaction just burning assets--- not directly very useful. [Big asterisks on the non obviously exploitable here, I've only thought about it for a minute or two and I really know fairly little about assets support in Liquid-- but exploiting it would require being able to create a fake 'shadow' asset with the a generator that is the negation of a real asset.]
In any case: This was recently fixed, but the "fix" introduced a hash collision vulnerability: The new fields added to the hash were not delimited. Failing to include type information like lengths in hashes is a perennial problem in cryptographic protocols.
Imagine you have a protocol where you sign a {comment, command} tuple, each a string. If the protocol computes the hash by just concating the command and comment and they're variable length fields, then you could get a signature of {"boring comment containing dangerous command", "boring command"} but then present it to someone as {"boring comment containing ","dangerous command boring command"} and have the signature pass. That sort of thing.
This new vulnerability has a somewhat straight forward path to exploitation and prints funds out of thin air.
Based on some of the public comments about nodes rejecting the attack transaction, I'm guessing they rolled out the "fix" to the federation in advance of publishing the changes because they seem to have accepted an attack that everyone else was still rejecting.
Advanced private deployment of a 'fix' might have gave them the confidence to drop the fix on github with little fanfare as it was "already fixed", but doing so painted a target on the issue that remained. Interestingly, off the shelf open weight AI like Kimi K3 immediately identify the new vulnerability without any particularly artful prompting. Makes me wonder if "safe" AI played a role in the introduction of the new, more serious, vulnerability.
Interestingly, it looks like the funds are being returned: https://mempool.space/tx/3a3eac4a26395b8c2563aaf1eb8b1b77798...
I'm going to guess that anyone who actually knows more has their hands busy dealing with the return of the funds. I'm not sure if anyone has ever taken and then returned 1/3rd of a billion dollars worth of assets before.
I'm told by someone who threw AI at it that there may be a way to exploit the initial longstanding vulnerability by counting on the fact that updates to validation cache are non-atomic: You can make an invalid transaction that primes the cache before its rejected. But that these priming transactions can't propagate in the network (because they're invalid)... so getting them to the parties that need to sign the blocks might have been impractical to exploit.
I wonder how they'd ever cash out.
https://en.wikipedia.org/wiki/Cryptocurrency_tumbler
Liquid already has confidentiality. I think the question is: how could they coerce the federated authorization to unfreeze peg-out to Bitcoin.
https://xcancel.com/Liquid_BTC/status/2096696272447218108#m
Xcancel is back? When did that happen?
https://news.ycombinator.com/item?id=49588988 "Nitter and XCancel resume service after legal advice" 5 hours ago
I don't know how "relevant replies" is calculated, but the top 8 responses when I clicked were all LLM generated. Pretty dire for twitter.
Is there any indications that this and the ColdCard heist could in fact be escaped distilled agents from the huggingface and similar attacks?
Now they have 300 million dollars
That should keep openai liquid for an extra 45min or so.
Not asking whether openAI did the hack that would be insane. However, agents could buy a lot of compute with $500m bit coin.
One disadvantage of decentralized money, criminals gain more power. Many such cases
There are always complaints on here about how Google is only paying $X for vulns. One advantage of decentralized digital money is that its bug bounties are self funding and the payout amount researcher-controlled.
I'm not sure if there is actually any evidence of this? Criminals do very well without crypto. If you look at percent of the economy that is fraudulent, it is quite large. If you look at percentage of crypto economy that is fraudulent, it is surprisingly similar
Plenty, search for cases of ransomware for example, you will find hundreds of instances where they demand payment by cryptocurrency, at least 1B per year.
This lacks comparison to regular economy.
That is a natural consequence of banks and governments losing power. That power balance shifts towards the citizens... some of whom are criminals.
The coin fanboys will argue that the bankers and government were criminals as well.
This is worded in a way that pretends like the banks and governments themselves aren't considered criminals by the masses.
I did mention that the coin fanboys think so. Do you invest in any coins?
Not really "one disadvantage" as much as "the main use case".
This is a centralization failure. Please learn more before commenting.
$320m, not a bad haul.
More than enough to buy yourself a pardon if you get caught.
And remember that there is precedence for Trump pardoned financial criminals avoiding restitution.
Crypto is a scam, lives of many people ruined, bitcoin is Epstein class owned.
Get rid of it.
Now you've convinced me.
I know that they are a cruel protected species who wander around like victims, no one wants to touch them.
[flagged]
Great, blog spam comments on HN now? Where is the "Cry that no independent regulator audited their systems and that the transactions were not reversible" coming from? Neither the Twitter thread nor the HN comments even mention anything about this, just the typical argument against yourself?
I am just saying that this would not happened with a normal bank. Pure DeFi structural deficiency.
But I see how polarized you are about the topic.
You can have smart wallets with reversible transactions. Even chargeback systems where both sides agree on a neutral judge to decide who's right. It takes time to set it up in a way that's secure, low cost and has good UX, but it's definitely possible.
Of course you need to use a well designed network like Ethereum or Solana for that, not a random Bitcoin sidechain controlled by a committee of BTC miners and shady VCs. This is a problem with Liquid not DeFi.
> I am just saying that this would not happened with a normal bank
Ok, but who were you quoting before? I too see how polarized your view seems to be, given you started this conversation with arguing against yourself for some reason.
> you started this conversation with arguing against yourself
How so ?
Meanwhile, what you qualified as blog spam is actually proving to be written by a human spending too much time answering your rant.
> How so ?
Who said any of the parts you quoted in https://news.ycombinator.com/item?id=49594757?
It looks like you made up all of those lines.
That the concept of comments: those lines come from me. No AI (can you believe?)
Hence the whole "arguing with yourself" part...
Generally, we use quotes here for actual quotes, not quoting stuff we've read in other newspapers or on reddit or whatever, but real verbatim quotes.
I think it used to be a proper guidelines back in the day, or at least people got really up in their arms if you used quote syntax for things that weren't actually verbatim quotes.
But besides that, what's the point? Why share other's viewpoints you don't even agree with, so you can argue against them yourself? Why not wait until someone who actually has those viewpoints, share them? Or even better, why not just say nothing at all?
Did you create an account this morning? This trend is a good ten year old lmao
“Inside job.”
It’s not "hackers". It’s an inside job, and a rug pull.
how is it a rug pull? if it's an inside job, doesn't that just make it theft?
What's the difference to you between a rug pull and theft?
In a rug pull, the thing you own (usually some kind of digital asset) goes down in value, leaving you with less money than you started with, whereas theft leaves you no longer possessing the asset itself.
A few extra steps. Usually, the rug pull doesn't involve directly taking something that belongs to other people, but instead, selling your own thing in a dishonest way.
A rug pull means you hype and then sell on the open market without.
A rug pull involves convincing someone to buy something first.
Theft doesn’t have to involve any convincing.
This is a pretty basic distinction. Perhaps you were thinking of “fraud”?
Rug pull is a trap, which can include theft. (You pull the rug and the victim in the cartoon would fall into the spikes hole).
That's always a possibility, and I'm sure it has happened a lot. I would suspect with the size of liquid it's more likely it was an exploit, but either way I don't think we'll ever know!
Usually we do find out, and in a majority of cases we find out it is a scam by the operators.
Yeah it was.
I mean of course it was. Everything in this whole ludicrous space is a scam of one kind or another. It's amazing to me that this is still even a point of discussion. It's obviously a rug pull.
Yes, fork after fork scam to control narrative.
Time for bitcoin classic++?
Are you thinking of ETH? All the bitcoin classic forks are over various aspect of network rules (eg. block size or block reward), not to roll back a transaction like ETH classic.
You’re right, I misremembered. Yeah, I was speaking about ETH Classic thing. Thanks for pointing that out.
Yeah… because in 15 years bitcoin has never forked for a hack. What a brain dead comment