The cryptocurrency world suffered another blow this week when Bittensor, a major artificial intelligence project, was forced to shut down its network after a series of wallet hacks. Investigators suspect a private key leak was behind the issue, raising concerns about the security of the entire crypto ecosystem.
On July 3, Bittensor co-founder Ala Shaabana announced the network’s shutdown via a social media post. The drastic measure came after attackers hijacked at least $8 million worth of TAO, Bittensor’s native token. The incident follows a similar theft a month earlier, where another wallet hemorrhage resulted in a loss of $11 million.
As an update, we have contained the attack and put the chain into safe mode (blocks producing but no transactions allowed).
We are still investigating and looking into all possibilities. Stay tuned.
— Ala (@shibshib89) July 3, 2024
The investigation is still ongoing and all possibilities are being explored, Shaabana revealed, emphasizing ongoing efforts to identify the culprit and prevent future breaches. The Bittensor team quickly put the network into “safe mode,” allowing blocks to be created but halting all transactions to contain the potential exploit.
Before the Bittensor network shutdown, the alarm was first raised by ZachXBT, a pseudonymous on-chain investigator with a keen eye for crypto shenanigans. Via his Telegram channel, ZachXBT reported the suspicious activity, which ultimately led to the network being shut down.
According to a Telegram report by blockchain security expert ZachXBT, an attack on the BitTensor (TAO) wallet occurred due to a private key leak. Previously, WooBlockchain reported that the BitTensor Foundation was investigating multiple attacks on BitTensor wallets, resulting in…
— BitcoinWorld Media (@ItsBitcoinWorld) July 3, 2024
TAO $11 million wallet theft. Source: ZachXBT
From smart contracts to software keys: hackers change targets
While initial concerns about cryptocurrency security focused on vulnerabilities in smart contracts (self-executing code on blockchains), the trend appears to be reversing. According to the “2024 Crypto HackHub Report” by Merkle Science, a cryptocurrency risk intelligence platform, private key leaks have surpassed smart contract exploits as the leading cause of digital asset theft in 2023. More than 55% of hacked funds were lost due to compromised private keys, highlighting a shift in hacker tactics.
AI Dreams on Hold: Bittensor’s Reputation Tarnished
Bittensor, with a market cap of $1.6 billion, is one of the largest blockchain projects focused on artificial intelligence. It aims to create a decentralized network where machine learning models from different owners can collaborate and share resources. This ambitious vision is built on a secure and reliable platform.
TAO down in the last 24 hours. Source: Coingecko
The recent security breaches have undoubtedly cast a shadow over Bittensor’s reputation. Investors have reacted quickly, with TAO token prices seeing a sharp drop. 14% drop after the attack. While some recovery has occurred after Bittensor announced mitigation measures, regaining user trust will be an uphill battle.
Featured image from TechHQ, chart from TradingView
