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Bittensor Blockchain Crashes After $8M Theft Impacts Users’ Wallets
The Bittensor blockchain was shut down Wednesday morning after an attack on multiple users’ wallets stole at least $8 million in the project’s TAO tokens.
Meanwhile, the breach prompted the Bittensor team to react quickly, temporarily halting all on-chain transactions to prevent further losses and investigate the attack.
In a message about the project Discord Channelsaid a member of the core team,
“We are investigating and, out of an abundance of caution, have recently completely suspended on-chain transactions until more information is available on the nature of this attack.”
The team assured users that all funds were safe after the network outage.
TAO Token Value Drops Due to Security Concerns
Following the announcement of the attack, the value of TAO tokens dropped by around 15%, trading at $235 at press time. However, there was a slight rebound after the core team announced that measures had been taken to mitigate further risks.
The attack was initially reported by pseudonymous on-chain investigator ZachXBT, who noted in a Telegram message,
“Bittensor has been shut down due to additional thefts that occurred earlier today, potentially due to leaked private keys.”
The address ‘5FbW’ was exploited, resulting in the theft of 32,000 TAO tokens worth approximately $8 million. This incident follows a similar one attack a month earlier, when another wallet was emptied of $11.2 million worth of TAO tokens.
The cause is suspected to be the leak of private keys.
The investigation into the attack suggests that a leak of private key information facilitated the theft. Ala Shaabana, the co-founder of Bittensor, announced on X,
“As an update, we have contained the attack and put the chain into safe mode (producing blocks, but not allowing transactions). We are still mid-investigation and are evaluating all possibilities.”
Private key leaks have become a more widespread problem in the crypto space, surpassing smart contract vulnerabilities. According to Merkle’s Science “2024 Crypto HackHub Report”, Over 55% of digital assets hacked in 2023 were lost due to private key leaks. This trend highlights a shift in hacker tactics, as they increasingly target easy vulnerabilities.
Response and recovery efforts
The Bittensor team has been working diligently to secure the network and restore normal operations in response to the breach. The blockchain has been placed in “safe mode,” meaning that while blocks are still being produced, no transactions are being processed. This measure is intended to prevent further unauthorized transactions while the investigation is ongoing.
The attack and subsequent network shutdown had a significant impact on the Bittensor community. With a market cap of $1.6 billion, Bittensor is one of the most significant AI-focused cryptocurrency projects.