- Bittensor halted network on July 3 after $8 million worth of assets were stolen.
- The exploit likely resulted from a private key leak.
- Co-founder Ala Shaabana announced the network outage on the same day.
- Over 55% of digital asset thefts in 2023 were due to private key leaks.
- Hackers increasingly target private keys over smart contract vulnerabilities.
Bittensor was forced to halt its network activity on July 3 after a significant exploit resulted in the theft of $8 million worth of digital assets.
The suspension aimed to contain the damage and prevent further losses. The action was announced by Ala Shaabana, co-founder of Bittensor, via a post on social media platform X.
By way of an update, we have contained the attack and put the chain into safe mode (blocks producing but no transactions are permitted). We’re still mid investigation and are considering all possibilities. Stay tuned.
Ala Shaabana, co-founder of Bittensor
Details of the Exploit
Onchain investigator ZachXBT first reported the theft in a Telegram message on July 3.
According to ZachXBT, the exploit was likely due to a private key leak. The unknown address “5FbW” was used to drain 32,000 Bittensor (TAO) tokens, valued at approximately $8 million.
This incident follows a similar attack on June 1, where $11.2 million worth of TAO tokens were stolen from a different wallet.
The increase in private key leaks has surpassed smart contract vulnerabilities as the leading cause of crypto thefts.
Rising Threat of Private Key Leaks
Private key leaks accounted for over 55% of hacked digital assets during 2023, as detailed in Merkle Science’s “2024 Crypto HackHub Report.”
Hackers are targeting private keys through methods like phishing attacks and insecure storage practices, as these are seen as easier targets compared to smart contract vulnerabilities.
According to Mriganka Pattnaik, co-founder and CEO of Merkle Science,
“While smart contract vulnerabilities remain a concern, hackers increasingly target areas outside smart contracts, like private key leaks. These leaks, often due to phishing attacks or insecure storage practices, have led to significant losses.”
Impact on Bittensor and Its Validators
Despite the hack, it has been clarified that validators do not have access to staked TAO, meaning delegated TAO should remain unaffected.
A small number of Bittensor subnets and validators were targeted. The network’s safe mode, which allows block production but restricts transactions, aims to maintain security while the investigation continues.
Ongoing Investigation
Bittensor’s team is still investigating the incident to understand the full extent of the breach and how the private key leak occurred.
The network remains in safe mode until further notice. By containing the attack promptly, the team hopes to mitigate any additional threats.
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Industry Concerns Over Security
Hacks and exploits continue to be a significant roadblock for the crypto industry. Over the past 13 years, nearly $19 billion has been stolen through 785 reported incidents – according to CoinTelegraph.
While smart contract vulnerabilities were once the primary cause, the shift toward private key leaks as a major threat underscores the evolving tactics of cybercriminals.
Advice for Investors
Crypto investors are advised to enhance their security measures, particularly around the storage and protection of private keys.
Storing keys in secure, offline environments and being cautious of phishing attacks can significantly reduce the risk of theft.
The Bittensor incident serves as a stark reminder of the importance of robust security practices in the crypto space.
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