Bittensor faced a significant security breach that led to the temporary suspension of its network on July 3. On-chain analyst, ZachXBT, reported that the exploit might involve a private key leakage, resulting in unauthorized access to wallets.

According to ZachXBT, the suspected address “5FbW” was used to drain approximately $8 million worth of Bittensor (TAO) tokens, totaling around 32,000 TAO.

Response and Investigation

In response to the exploit, Bittensor's core team decided to halt all network transactions. This decision aimed to prevent further unauthorized access while a thorough investigation was conducted. 

"We are investigating what appears to have been an attack on a number of Bittensor wallets over the last 3 hours,” the Bittensor team said in a statement.” “We are investigating, and in an abundance of caution, have recently fully halted transactions on chain until there is more information available to us about the nature of this attack.”

From the moment of the halt, the chain will remain in safe mode for at least 24 hours. This means that all transactions, including transfers, are now paused as the team investigates the root cause of the attack. 

In addition, Bittensor stated that they will not be releasing any regular software updates for the Bittensor software or chains until the chain has been fully restored.

Bittensor is a network that connects machine learning models owned by people around the world, democratizing AI and creating an open-source neural network.

Previous Incidents and Broader Context

This isn't the first time Bittensor community has faced security issues. Last June, over $11.2 million in TAO was stolen from a large holder, as reported by ZachXBT. At that time, the token was valued at around $400 each.

The broader cryptocurrency industry has seen a significant rise in exploits and scams. As a result of hacks and scams, the industry lost $572.7 million in the second quarter of this year, according to a report by Immunefi. This marks a 70.3% increase from the $336.3 million lost in the first quarter and a 112% increase compared to Q2 2023 when $265.5 million was stolen. 

Bittensor’s TAO fell 14% over the last 24 hours, trading at $234.5, at the time of writing.