Bittensor Suspends Network Operations Following 8 Million Wallet Emptied

Bittensor Shuts Down Network Operations Following $8 Million Wallet Draining


Hassan Shittu
Last updated:
July 3, 2024, 11:23 EDT
|
2 min read


Due to a significant security breach that resulted in the theft of over $8 million in cryptocurrencies, Bittensor has ceased all of its operations as of July 3. This incident highlights the persistent security challenges faced by the cryptocurrency industry, where hacks and exploits continue to impede widespread adoption.
Immediate Response to Wallet Draining
On July 3, Bittensor, a leading decentralized network that focuses on artificial intelligence and has a market capitalization of $1.6 billion, halted its network activity after a series of wallet drainages led to the theft of at least $8 million worth of digital assets. The network outage was initiated by Bittensor to contain the exploit.
Ala Shaabana, one of the co-founders of Bittensor, announced on X that they have managed to contain the attack and put the chain into safe mode, allowing for block production but no transactions. The team is currently conducting an investigation and exploring all potential scenarios.
The theft was first discovered by a pseudonymous on-chain investigator named ZachXBT, who revealed in a Telegram message on July 3 that Bittensor was temporarily halted due to additional thefts that occurred earlier that day, possibly due to a private key leak. Reports suggested that an unknown address, “5FbW,” was exploited to acquire 32,000 Bittensor (TAO) tokens valued at around $8 million.
This attack followed a similar incident on June 1, where another wallet was drained of $11.2 million worth of TAO tokens, as reported by ZachXBT.


June 1 TAO $11 million drain.
Source:
ZachXBT
Following the attack, the price of TAO tokens experienced a 15% drop. However, there was a slight recovery after the Bittensor team reassured the community of ongoing measures to prevent further incidents. A member of the Bittensor core team announced on the project’s Discord channel:
Co-founder Ala Shaabana confirmed on X that the chain was in “safe mode,” with blocks being produced but no transactions processed. Blockchain trackers indicated that the last transactions and blocks were processed around 23:00 UTC on Tuesday.
Shift in Attack Strategies Amid Crypto Theft
While smart contract vulnerabilities were previously the primary cause of significant crypto thefts, private key leaks have become more prevalent. Mriganka Pattnaik, co-founder and CEO of Merkle Science, stated that hackers are now increasingly targeting areas outside smart contracts, such as private key leaks, often due to phishing attacks or insecure storage practices, leading to substantial losses.
In contrast, losses due to smart contract vulnerabilities fell by 92% in 2023, dropping to $179 million from $2.6 billion in 2022.
This year, the crypto market saw a revival following the US SEC’s approval of Bitcoin ETFS in January, which raised the sector’s valuation from $1.76 trillion in February to $2.32 trillion.
However, the industry continues to face major security challenges, as highlighted by various hacking incidents. PeckShield reported that Btcturk experienced the biggest crypto-related hack in June, losing an estimated $100.25 million. Lykke also faced a major hack, resulting in a $22 million loss. Despite these incidents, April saw a notable decline in combined losses from crypto hacks and scams, with only $25.7 million lost, the lowest monthly total since 2021.
In the first quarter of 2024, $336 million was lost to Web3 hackers and fraud, a 23% decrease from the same period in 2023. Notably, seven specific cases have recovered $73.9 million of stolen Web3 capital.
Follow Us on Google News