The world of cryptocurrency took another blow this week as Bittensor, a prominent AI-focused project, was forced to halt its network after a series of wallet hacks. Investigators suspect a private key leak may be to blame, raising concerns about the security of the entire crypto ecosystem.
On July 3rd, Bittensor co-founder Ala Shaabana announced a network shutdown via a social media post. This drastic measure came after attackers siphoned off at least $8 million worth of TAO, Bittensor’s native token. The incident follows a similar theft just a month prior, where another wallet hemorrhage resulted in a loss of $11 million.
By way of an update, we have contained the attack and put the chain into safe mode (blocks producing but no transactions are permitted).
We’re still mid investigation and are considering all possibilities. Stay tuned.
— Ala (@shibshib89) July 3, 2024
They are still mid-investigation and are considering all possibilities, Shaabana disclosed, highlighting the ongoing efforts to identify the culprit and prevent future breaches. The Bittensor team swiftly put the network into “safe mode,” allowing for block creation but halting all transactions to contain the potential exploit.
Before Bittensor’s network shutdown, the alarm was first raised by ZachXBT, a pseudonymous on-chain investigator with a keen eye for crypto shenanigans. Through his Telegram channel, ZachXBT flagged the suspicious activity, which ultimately led to the network halt.
According to blockchain security expert ZachXBT’s Telegram report, an attack on the BitTensor (TAO) wallet has occurred due to a private key leak. Previously, WooBlockchain reported that the BitTensor Foundation is 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 Soft Keys: Hackers Shift Targets
While the initial focus of crypto security concerns centered on vulnerabilities within smart contracts – self-executing code on blockchains – the tide appears to be turning. According to the “2024 Crypto HackHub Report” by Merkle Science, a crypto risk intelligence platform, private key leaks surpassed smart contract exploits as the leading cause of stolen digital assets in 2023. Over 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, boasting a market capitalization 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 various owners can collaborate and share resources. This ambitious vision hinges on a secure and trustworthy platform.
TAO down in the last 24 hours. Source: Coingecko
The recent security breaches have undoubtedly cast a shadow over Bittensor’s reputation. Investors reacted swiftly, with TAO token prices experiencing a 14% drop in the aftermath of the attack. While some recovery occurred after Bittensor announced mitigation measures, regaining user trust will be an uphill battle.
Featured image from TechHQ, chart from TradingView