The Bittensor team detected suspicious activity on Wednesday morning, prompting an immediate suspension of all network operations. Blockchain explorers confirm that no new blocks have been generated for over six hours, effectively putting the network in “safe mode” and blocking all transactions.

This swift action was taken as a precautionary measure to prevent potential further damage. The market responded quickly to the news, with the TAO token experiencing a significant 12% price drop, reflecting investor concerns about the network’s security.

Network Security Breach, Investigation and Community Response

While official details remain limited, early reports suggest the attack may have involved unauthorized access to user wallets. Security researcher ZachXBT has proposed that a leak of private keys, which function as passwords to crypto wallets, might be the root cause. Bittensor co-founder Ala Shaabana confirmed the network halt and assured users that the situation is under control, stating that the attack has been contained.

The Bittensor community on Discord is actively discussing the situation, with a moderator named “Watchmaker” confirming that the network will remain in “safe mode” for at least 24 hours while the investigation continues. As an additional precaution, regular software updates have been temporarily suspended until the network is fully restored and secured.

Market Impact and Token Performance

The security breach has had a significant impact on the Bittensor ecosystem, particularly its native token, TAO. In the 24 hours following the incident, TAO’s price fell sharply by more than 12%, dropping from $281.67 to $237.32. This however has continued the 16.50% price decline over the past week. Amidst the chaos the open interest of TAO has surged by 16.38% and a current valuation of $36.4 million.

At the time of reporting, TAO’s price stands at $237.45, with a 24-hour trading volume of $84.8 Million. The circulating supply of TAO is currently 7 Million tokens. These market movements reflect the uncertainty surrounding the network’s security and the potential long-term implications of the breach. As the investigation progresses and more information becomes available, it’s likely that the market will continue to react to developments in this ongoing situation.