Developers of the decentralized AI project Bittensor have halted blockchain operations following the discovery of an attack on user wallets. One user lost $8 million in TAO tokens.
At the time of writing, the network has not processed new blocks for over five hours, according to explorer data.
“We are investigating and have recently halted all chain transactions as a precaution until we have more information about the nature of this attack,” a team member stated on Discord.
On-chain analyst ZachXBT suggested that there was a leak of private keys. He noted that 32,000 TAO worth $8 million were stolen from a single address.
Bittensor co-founder Ala Shaabana confirmed that the project’s network has been switched to safe mode—blocks are being produced, but transactions are not being processed.
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
Bittensor positions itself as a decentralized marketplace for providers and users of algorithms in AI and machine learning fields. The governance token TAO has a capped supply of 21 million coins, similar to Bitcoin.
Following the incident, the asset’s price dropped from ~$265 to ~$225—a 15% decline. After a slight recovery, TAO is trading around $238.
In the AI token segment, TAO ranks sixth by market capitalization, with a value of ~$1.66 billion (CoinGecko).
Earlier in the second quarter, the crypto industry lost ~$572.7 million due to hacks and fraud across 72 incidents, according to Immunefi.