‘Decentralized’ AI network Bittensor halted in response to $8M hack
Much-hyped, AI-focused blockchain Bittensor remains paused after at least 32,000 TAO (worth $8 million) were reportedly stolen from the network’s validators.
While the cause of the attack is yet to be confirmed by the Opentensor Foundation, independent on-chain investigator ZachXBT suspects a private key leak.
The Bittensor community was alerted to the incident by a sudden 9% drop in the price of TAO, as stolen tokens were sold off.
The token continued to suffer, hitting a low of $227, down 13% from its price of $260 immediately before the hack, according to data from CoinMarketCap.
In an update on X (formerly Twitter), Bittensor co-founder Ala Shaabana confirmed that the chain has been placed into ‘safe mode.’ The pause in transactions will last for ‘at least the next 24 hours,’ according to a further update in the project’s Telegram channel.
Read more: Blast L2 hack prompts debate over centralization of Ethereum rollups
In early June, $11.2 million worth of TAO was stolen from a large holder, according to another alert by ZachXBT. At the time, the token was worth around $400.
The decision to pause the network mirrors the move made by BNB Chain validators in response to October 2022’s $600 million hack of the BNB Bridge.
Pausing the (also supposedly decentralized) BNB Chain prevented the hacker from moving $430 million of the stolen funds off the network.
Earlier this year, $92 million was returned after a rogue developer withdrew user funds from NFT project Munchables. Given that the theft took place on the controversial Ethereum L2 Blast, many saw fit for the chain to be ‘rolled back’ in order to undo the damage.
Read more: Explained: How $600M was stolen from Binance’s BNB chain
Ultimately, the move proved unnecessary, as developers were capable of freezing the culprit’s account, which encouraged the return of funds.
While such drastic action (or even the threat of it) has proved effective in minimizing losses, and may well have prevented further Bittensor validator losses, it is often considered controversial.
Many consider that using such powers undermines the credibility of a network, violating claims of decentralization, considered by most to be a core tenet of cryptocurrency.
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