This was a case of mistaken identity and failure of communication by the Liberty's chain of command.

The Liberty was somewhere she shouldn't have been.
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[link to en.wikipedia.org]

"On the night of June 7 Washington time, early morning on June 8, 01:10Z or 3:10 AM local time, the Pentagon issued an order to 6th Fleet headquarters to tell the Liberty to come no closer than 100 nmi (120 mi; 190 km) to Israel, Syria, or the Sinai coast (Oren, p. 263).[18](pages 5 and Exhibit N, page 58).
According to the Naval Court of Inquiry[19] (p. 23 ff, p. 111 ff) and National Security Agency official history,[20] the order to withdraw was not broadcast on the frequencies that the Liberty crew was monitoring for orders until 15:25 Zulu, hours after the attack, due to a long series of administrative and communications problems. The Navy said a large volume of unrelated high-precedence traffic, including intelligence intercepts related to the conflict, was being handled at the time and it also faulted a shortage of qualified radio men as a contributing factor to the failure to send the withdrawal message to Liberty in time