Blockchain startup Bittensor has taken the drastic step of halting its network temporarily following the exposure of a private key, which has led to a significant 16% decline in its token’s value.
Bittensor, known for its decentralized machine learning protocol, appears to have fallen prey to a targeted attack by hackers who infiltrated multiple wallets within its ecosystem, resulting in an estimated $8 million loss.
The incident came to light through a Telegram post by blockchain investigator ZachXBT on July 2, where it was disclosed that hackers had withdrawn over 30,000 Bittensor TAO tokens, amounting to roughly $8 million at the time. Bittensor subsequently confirmed the breach in a Discord channel, prompting the decision to temporarily suspend network operations.
At present, the exact cause of the security breach remains ambiguous, although ZachXBT suggested it could be attributed to a leak of private keys. Following the breach, the value of the TAO token plummeted by nearly 16% to $227, as reported by CoinMarketCap, before later recovering to $238.
Founded in 2019 by AI researchers Ala Shaabana and Jacob Steeves, Bittensor initially functioned as a Polkadot parachain before transitioning to its own layer-1 chain in March 2023. Reports indicate that Polychain Capital provided backing to Bittensor in 2019 and held approximately $200 million worth of its tokens as of April.
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