Bittensor Blockchain Halts After $8M Theft Impacts User Wallets

The Bittensor blockchain was disrupted early Wednesday after an attack on multiple user wallets stole at least $8 million worth of the project’s TAO tokens. 

Meanwhile, the breach prompted a swift response from the Bittensor team, which temporarily halted all on-chain transactions to prevent further losses and investigate the attack.

In a message on the project’s Discord channel, a core team member stated, 

“We are investigating, and in an abundance of caution, have recently fully halted transactions on-chain until more information is available about the nature of this attack.” 

The team assured users that all funds were safe following the network halt.

TAO Token Value Drops Amid Security Concerns

Following the announcement of the attack, the value of TAO tokens dropped by approximately 15%, trading at $235 at press time. However, there was a slight recovery after the core team communicated that measures were being taken to mitigate additional risks. 

The attack was initially flagged by pseudonymous on-chain investigator ZachXBT, who noted in a Telegram message, 

“Bittensor was halted due to additional thefts earlier today, potentially due to private key leakage.”

The address ‘5FbW’ was exploited, leading to the theft of 32,000 TAO tokens worth around $8 million. This incident follows a similar attack a month earlier when a different wallet was drained of $11.2 million worth of TAO tokens.

Private Key Leak Suspected as Cause

The investigation into the attack suggests that a private key leak facilitated the theft. Ala Shaabana, the co-founder of Bittensor, announced on X, 

“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.”

Private key leaks have become a more prevalent issue in the crypto space, surpassing smart contract vulnerabilities. According to Merkle Science’s “2024 Crypto HackHub Report,” over 55% of hacked digital assets in 2023 were lost due to private key leaks. This trend highlights a shift in hackers’ tactics, increasingly targeting easier vulnerabilities.

Response and Recovery Efforts

Bittensor’s team has been working diligently to secure the network and restore normal operations in response to the breach. The blockchain has been put into “safe mode,” meaning that while blocks are still being produced, no transactions are being processed. This measure aims to prevent any further unauthorized transactions while the investigation is ongoing.

The attack and subsequent network halt have notably impacted the Bittensor community. With a market capitalization of $1.6 billion, Bittensor is one of the most significant artificial intelligence-focused crypto projects.