Bittensor TAO Plunges 25% After $10 Million Covenant AI Exit

- TAO sinks 25% as Covenant AI exits network - $10 million token sell-off sparks ETF setback On April 11, 2024, Bittensor’s TAO token plunged over 25% after Covenant AI abruptly exited the network, triggering a $10 million liquidation and raising doubts over project decentralization. Covenant AI operated the key Covenant-72B model and ran multiple subnets, and the team accused Bittensor leadership—specifically co-founder Jacob Steeves—of “fake decentralization” and direct control. They alleged that Steeves unilaterally suspended reward emissions to their subnets and applied economic pressure to force their departure. Covenant AI’s move to dump 37,000 TAO tokens sparked a rapid sell-off and shook investor confidence, and the fallout hit markets quickly. As a result, Grayscale’s Bittensor ETF (GTAO) dropped 12.5% to $9.20 amid concerns over governance and network stability. In response, Bittensor co-founder Jacob Steeves announced a recovery plan focused on a “Locked Stake” mechanism. The plan aims to encourage long-term participation by subnet operators and curb abrupt exits, and the community will debate the proposal in the next Bittensor call as leaders work to restore trust. As of April 12, 2026, at 19:08 UTC, TAO trades at $260.56, with a -2.36% 24-hour volume change, according to market data.