Hackers Shift Targets From Smart Contracts To Soft Keys: Bittensor, a $1.6B AI-Focused Project, Halts Network After Wallet Hacks

The world of cryptocurrency took another blow this week as Bittensor, a prominent AI-focused project, was forced to halt its network after a series of wallet hacks.

Cryptocurrency project Bittensor was forced to halt its network on July 3rd after a series of wallet hacks. Investigators suspect a private key leak may be to blame.

According to a social media post by Bittensor co-founder Ala Shaabana, the network shutdown was implemented after attackers managed to siphon off at least $8 million worth of TAO, the native token of the Bittensor blockchain. This incident marks the second time in a month that a large sum of money has been stolen from Bittensor wallets, with another wallet hemorrhage in June resulting in a loss of $11 million.

The BitTensor team is currently investigating the incident and considering all possibilities. They have also put the chain into “safe mode” to contain the potential exploit.

Before the network shutdown, the alarm was first raised by ZachXBT, a pseudonymous on-chain investigator who boasts an impressive track record in uncovering crypto shenanigans. Through his Telegram channel, ZachXBT flagged the suspicious activity, which ultimately led to the network halt.

This news comes as blockchain security experts, such as ZachXBT, have noted a shift in tactics employed by hackers in the crypto realm. While initially targeting vulnerabilities within smart contracts – self-executing code on blockchains – the focus now appears to be shifting.

According to the “2024 Crypto HackHub Report” by Merkle Science, a crypto risk intelligence platform, private key leaks surpassed smart contract exploits as the leading cause of stolen digital assets in 2023. Over 55% of hacked funds were lost due to compromised private keys, highlighting a change in strategy by hackers.

Bittensor, boasting a market capitalization of $1.6 billion, is one of the largest blockchain projects centered around artificial intelligence. It aims to create a decentralized network where machine learning models from various owners can collaborate and share resources. This ambitious vision hinges on a secure and trustworthy platform.

However, the recent security breaches have tarnished Bittensor's reputation, impacting investor confidence. Following the attack, TAO token prices experienced a 14% drop. While some recovery occurred after Bittensor announced mitigation measures, regaining user trust will be a gradual process.