🚨 On September 6, 2026, @Liquid_BTC was affected by a cache key collision vulnerability in rangeproof verification. An attacker minted ~3,998.5 L-BTC with no corresponding peg-in. Within minutes, the unbacked L-BTC was pegged out into real BTC on the Bitcoin mainnet. About 3,400 BTC was later returned to the federation peg wallet, while ~598.5 BTC remains under the attacker’s control. The SlowMist Security Team traced the fund flows on the #Bitcoin side using @MistTrack_io and fully analyzed the incident. 🧩 Attack flow: 1️⃣ Two setup transactions first landed valid rangeproofs and commitments, while embedding a crafted payload in the locking script to seed node caches. 2️⃣ A follow-up minting output reused a colliding cache key — the same raw concatenation of proof, commitment, asset commitment, and scriptPubKey, but with different field boundaries. 3️⃣ On a cache hit, nodes skipped secp256k1_rangeproof_verify and min-value checks, accepted an unbacked commitment, and minted ~3,998.5 L-BTC. The fake UTXOs were consolidated and pegged out within minutes. ⚙️ Root Cause: The Elements rangeproof cache key concatenated variable-length fields without length prefixes. Distinct argument tuples could hash to the same key, so a positive cache hit meant skipping cryptographic verification. 🛡️ SlowMist Insight: A positive-result cache in a consensus verification path is itself a cryptographic primitive. Every field the verifier reads — and every field boundary — must be unambiguously bound into the key. Treat cache-key integrity as a mandatory item in consensus-layer audits. Full analysis👇 https://medium.com/@slowmist/analysis-of-the-liquid-network-cache-key-collision-vulnerability-nearly-4-000-l-btc-minted-out-of-e2010c446971(SlowMist)