As a seasoned crypto investor, I’ve seen my fair share of market volatility and project setbacks. The latest news regarding Bittensor’s network halt due to wallet hacks is disheartening, to say the least. The potential private key leak and subsequent loss of millions in TAO tokens underscores a growing concern within the crypto ecosystem: hackers are increasingly targeting weak points beyond smart contracts.
In the realm of cryptocurrencies, another setback occurred this week as Bittensor, a notable AI-centric initiative, was compelled to shut down its network due to a string of wallet breaches. Preliminary probes indicate that a potential private key leak might be the culprit, sparking apprehensions about the overall security within the digital currency sector.
As an analyst, I’d rephrase it as: On July 3rd, I, Ala Shaabana, co-founder of Bittensor, announced on social media that we would be implementing a network shutdown. This decision was made in response to a cyberattack that resulted in the theft of at least $8 million worth of TAO, our native token. Regrettably, this incident follows another attack from a month prior, which saw the loss of approximately $11 million from one of our wallets.
To provide some new information, we’ve managed to halt the attack and switched the chain to a secure state, preventing any further production of blocks but allowing no transactions for the time being.
We’re still mid investigation and are considering all possibilities. Stay tuned.
— Ala (@shibshib89) July 3, 2024
Sharing an update on the ongoing investigation, Shaabana revealed that all possibilities are being explored and every effort is being made to pinpoint the perpetrator and fortify defenses against similar occurrences in the future. In response to the suspected breach, the Bittensor team swiftly implemented “safe mode,” permitting new block creation while halting transactions to limit the potential damage of the exploit.
As a meticulous on-chain researcher with a knack for uncovering cryptocurrency anomalies under the pseudonym ZachXBT, I first identified some questionable behavior within the Bittensor network just prior to its shutdown. Utilizing my Telegram channel as a platform to share my findings, I raised the alarm and alerted the community to the suspicious activity, ultimately contributing to the network’s halt for further investigation.
Based on the findings of blockchain security expert ZachXBT in his Telegram report, an incident involving the BitTensor (TAO) wallet has taken place due to a breach in which private keys were exposed. Earlier reports from WooBlockchain indicated that the BitTensor Foundation was currently examining several instances of attacks on BitTensor wallets, leading to financial losses.
— BitcoinWorld Media (@ItsBitcoinWorld) July 3, 2024
From Smart Contracts To Soft Keys: Hackers Shift Targets
The concern over cryptocurrency security used to primarily revolve around weaknesses in smart contracts on blockchains. However, a recent report by Merkle Science, a crypto risk intelligence platform named “2024 Crypto HackHub Report,” indicates a change in trend. In 2023, private key leaks overtook smart contract exploits as the primary cause of digital asset theft, with approximately 55% of stolen funds being attributed to this issue. This underscores a new approach taken by hackers.
AI Dreams On Hold: Bittensor’s Reputation Tarnished
With a market capitalization of $1.6 billion, Bittensor ranks among the largest blockchain initiatives dedicated to artificial intelligence. Its objective is to establish a decentralized network where machine learning models owned by multiple entities can cooperate and pool resources. The success of this ambitious endeavor relies on providing a robust and reliable platform.
TAO down in the last 24 hours. Source: Coingecko
The latest security incidents have significantly damaged Bittensor’s public image. In response, investors immediately sold off TAO tokens, leading to a 14% decrease in their value. Although some progress was made when Bittensor disclosed their remediation plans, rebuilding user confidence will be a challenging task.
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2024-07-03 23:42