The world of cryptocurrency took one other blow this week as Bittensor, a outstanding AI-focused project, was forced to halt its network after a series of wallet hacks. Investigators suspect a personal key leak could also be guilty, raising concerns in regards to the security of the whole crypto ecosystem.

On July third, Bittensor co-founder Ala Shaabana announced a network shutdown via a social media post. This drastic measure got here after attackers siphoned off not less than $8 million price of TAO, Bittensor’s native token. The incident follows an identical theft only a month prior, where one other wallet hemorrhage resulted in a lack of $11 million.

By the use of an update, we’ve got contained the attack and put the chain into secure mode (blocks producing but no transactions are permitted).

We’re still mid investigation and are considering all possibilities. Stay tuned.

— Ala (@shibshib89) July 3, 2024

They’re still mid-investigation and are considering all possibilities, Shaabana disclosed, highlighting the continuing efforts to discover the wrongdoer and stop future breaches. The Bittensor team swiftly put the network into “secure mode,” allowing for block creation but halting all transactions to contain the potential exploit.

Before Bittensor’s network shutdown, the alarm was first raised by ZachXBT, a pseudonymous on-chain investigator with a keen eye for crypto shenanigans. Through his Telegram channel, ZachXBT flagged the suspicious activity, which ultimately led to the network halt.

In response to blockchain security expert ZachXBT’s Telegram report, an attack on the BitTensor (TAO) wallet has occurred as a consequence of a personal key leak. Previously, WooBlockchain reported that the BitTensor Foundation is investigating multiple attacks on BitTensor wallets, leading to…

— BitcoinWorld Media (@ItsBitcoinWorld) July 3, 2024

TAO $11 million wallet theft. Source: ZachXBT

From Smart Contracts To Soft Keys: Hackers Shift Targets

While the initial focus of crypto security concerns centered on vulnerabilities inside smart contracts – self-executing code on blockchains – the tide appears to be turning. In response to the “2024 Crypto HackHub Report” by Merkle Science, a crypto risk intelligence platform, private key leaks surpassed smart contract exploits because the leading reason for stolen digital assets in 2023. Over 55% of hacked funds were lost as a consequence of compromised private keys, highlighting a shift in hacker tactics.

AI Dreams On Hold: Bittensor’s Popularity Tarnished

Bittensor, boasting a market capitalization of $1.6 billion, is one in all the most important blockchain projects focused on artificial intelligence. It goals 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.

TAO down within the last 24 hours. Source: Coingecko

The recent security breaches have undoubtedly solid a shadow over Bittensor’s repute. Investors reacted swiftly, with TAO token prices experiencing a 14% drop within the aftermath of the attack. While some recovery occurred after Bittensor announced mitigation measures, regaining user trust shall be an uphill battle.

Featured image from TechHQ, chart from TradingView