The cryptocurrency world took another hit this week as Bittensor, a prominent AI-focused project, was forced to shut down its network after a series of wallet hacks. Investigators suspect a private key leak may have been to blame, raising concerns about the security of the entire cryptocurrency ecosystem.
On July 3, Bittensor co-founder Alaa Shaabana announced the network shutdown via a social media post. The drastic move came after attackers stole at least $8 million worth of TAO, Bittensor’s native token. The incident follows a similar theft just a month ago, when another wallet drain resulted in the loss of $11 million.
With the update, we have contained the attack and put the chain in safe mode (block production but no transactions allowed).
We are still in the middle of the investigation and looking at all possibilities. Stay tuned for more.
— Alaa (@shibshib89) July 3, 2024
Shabana revealed that they are still in the middle of the investigation and are considering all possibilities, highlighting ongoing efforts to identify the culprit and prevent future breaches. The Bittensor team quickly put the network into “safe mode,” allowing blocks to be generated but halting all transactions to contain the potential exploit.
Before the Bittensor network shut down, the first to raise the alarm was ZachXBT, an anonymous cryptocurrency blockchain investigator with a keen eye for crypto adventures. Through his Telegram channel, ZachXBT flagged the suspicious activity, which eventually led to the network being shut down.
According to a report by blockchain security expert ZachXBT on Telegram, an attack on the BitTensor (TAO) wallet occurred due to a private key leak. Previously, WooBlockchain reported that the BitTensor Foundation is investigating multiple attacks on BitTensor wallets, which resulted in…
— BitcoinWorld Media (@ItsBitcoinWorld) July 3, 2024
TAO $11 million wallet theft. Source: ZachXBT
From Smart Contracts to Keyloggers: Hackers Shift Targets
While cryptocurrency security concerns initially focused on vulnerabilities in smart contracts — self-executing code on blockchains — the tide appears to be turning. According to the “Crypto HackHub 2024” report by Merkle Science, a cryptocurrency risk intelligence platform, private key leaks overtook smart contract vulnerabilities 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 Is Tarnished
With a market cap of $1.6 billion, Bittensor 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 based on a secure and trustworthy platform.
TAO down in the last 24 hours. Source: Coingecko
There’s no doubt that the recent security breaches have cast a shadow over Bittensor’s reputation. Investors have responded quickly, with the TAO token price seeing a sharp drop. 14% decrease In the wake of the attack. While there has been some recovery after Bittensor announced mitigation measures, regaining user trust will be an uphill battle.
Featured image by TechHQ, chart by TradingView