Bittensor is among the artificial intelligence-focused cryptocurrency projects that have become popular recently amid the AI hype. Although the project website boasts that "Bittensor is creating a new future for humanity, where new economies and new commodities are decentralized by design and where no single entity is a sole authority," the group unilaterally halted the chain in the wake of the attack.
Bittensor wallets drained
Some users of the Bittensor wallet software suffered wallet drains as thieves emptied their cryptocurrency wallets of the project’s TAO token. Around 32,000 TAO, notionally worth around $8 million, was siphoned. Although blockchain sleuth zachxbt hypothesized that the attack may have been thanks to a private key leak, Bittensor later claimed that affected users had in fact been compromised by a malicious Bittensor package that had been uploaded to Python's PyPi package manager. It's not yet clear how the malicious package made it onto the package manager.
- "Bittensor Community Update — July 3, 2024", Opentensor Foundation [archive]
GNUS.ai exploited for $1.27 million
An exploiter was able to create a fake version of the $GNUS token on the Fantom blockchain, then bridge the tokens to Ethereum and Polygon where they were then sold as though they were authentic. They were able to drain $1.27 million from the project's liquidity pools.
GNUS.ai (short for "Genius", not a reference to the animal) is one of many AI-related blockchain projects that has sprung out of the recent AI hype. This particular one promises to allow people to "utiliz[e] unused cycles" on various computing devices for computation-intensive AI systems, using cryptocurrency for payments.
Wilder World game suffers $1.8 million theft, blames contractor
Wilder World is a blockchain-based racing game that uses all the buzzwords: blockchains, artificial intelligence, and metaverse. On March 16, someone with access to the project deployer's private key upgraded legacy contracts and transfer the project's $WILD and $MEOW tokens to themselves. Altogether, the attacker profited 515 ETH (~$1.8 million), which they then laundered through the Tornado Cash cryptocurrency tumbler.
The project blamed the theft on a previous contractor who had the private key. They also explained that the attacker seemed to be a developer based on the fact that they had "specialized knowledge of ZERO's internal security systems".
NFPrompt discloses hack
A Binance-incubated platform called NFPrompt claims to be "the first Prompt Artist Platform in Web3" — with "prompt artist" referring to people who come up with prompts to feed into large language models. More succinctly, it's a platform to sell the NFTs you've made out of AI-generated images.
The platform announced on March 15 that it had suffered a "critical security incident" that it attributed to "a group of hackers" who were able to gain access to funds belonging both to the project's users and the project itself. They did not disclose how much was taken.
The project announced that it was working with the FBI, and had contacted centralized exchanges to ask them to freeze stolen funds.
Mozaic exploited for $2 million, recovers 90%
The "AI-optimized" defi project Mozaic Fi was exploited by an attacker who drained around $2 million in funds from the project.
According to MozaicFi, the theft had been perpetrated by a rogue developer who was able to gain access to a private key held by a core team member. They also claimed that a simultaneous large sale of the Mozaic token resulted in cascading liquidations.
In good news for the project, the attacker moved around 90% of the stolen funds to MEXC, a centralized cryptocurrency exchange that was able to freeze the thief's access to the funds.
"The AI Protocol" burns tokens after holder suffers $4.3 million theft
Someone who held over 111.6 million ALI tokens from a project called The AI Protocol was phished by someone using a wallet drainer service using a permit phishing technique. The tokens were priced at around $4.3 million.
Blockchain sleuth zachxbt was able to coordinate with the project to organize a community governance vote to burn the stolen tokens before the attacker was able to cash out. Although this doesn't return the stolen funds to their original owner, it at least keeps the attacker from profiting.
Megabot exit scams for almost $750,000
The Megabot project rug pulled, stealing $742,000 from those who bought in to the project's presale. The majority of the money — around $692,000 — was stolen on the Solana network.
Megabot had advertised itself as an AI trading bot that would earn users "up to 30% monthly". The team had promised that the bot would perform trades while "sidestepping potential risks such as honeypots, rugs, and slow rugs".
"No one will be able to rug you anymore", their website boasted. Ah, well.
Fraudsters steal more than $25 million in "AI-powered" crypto ponzi
Two fraudsters capitalized on the hype around both cryptocurrency and artificial intelligence, advertising an "artificial intelligence automated trading bot" that they promised would earn large returns for their investors. Instead, however, the fraudsters spent the money on themselves, paying for private chartered jet flights, luxury hotel accommodations, private mansion rentals, a personal chef, and private security guards.
In addition to pulling off the original scam, the fraudsters also came up with a fake investigative agency called the "Federal Crypto Reserve", where they directed victims who were seeking to recover their losses.
The scammers were charged with wire fraud, money laundering, and obstruction of justice, which carry hefty maximum prison terms.
- "Two Men Charged for Operating $25M Cryptocurrency Ponzi Scheme", Department of Justice press release [archive]
OptyFi shuts down, citing regulatory threats and failed fundraising attempt
OptyFi, a so-called "AI-powered defi" project, announced it would be shutting down for a variety of reasons. First, they blamed their recent failed token sale, in which they had hoped to raise $600,000. They blamed this failed sale on their Discord project being hacked, and on various community members falling victim to a fake token sale link.
However, they stated that the main reason they decided to shut down the project was the "significant and mounting regulatory challenges", pointing to the recent claim by the BarnBridge defi project that they were under SEC investigation. According to OptyFi, they are concerned that the $OPTY token or OptyFi vault tokens could be deemed securities, or that the OptyFi vaults themselves could be determined to be a "Mutual Fund type vehicle".
OptyFi promised to refund any tokens purchased during the most recent token sale, but many community members still accused the project team of rug pulling. OptyFi had previously raised $2.4 million in a seed funding round in January 2022.
- "OptyFi Project Update", Medium
- "Press release: OptyFi raises $2.4M seed round, launches on mainnet", CoinTelegraph
Encryption AI rug pulls for $2 million, developer allegedly blames gambling addiction
A project called "Encryption AI" promised a Telegram bot that would provide a "secure and efficient way to launch tokens". People poured in around $2 million before the developer suddenly withdrew all the funds, crashing the token price by 99%.
The developer reportedly posted a message to Telegram, apologizing for taking the funds. "I must confess that I have fallen into a severe addiction to online gambling and casinos," the developer reportedly wrote. "Despite being only 22 years old, I have struggled to overcome this addiction, and unfortunately, I have lost nearly $300,000 over the past few months, including after the launch of [Encryption AI]."
They added, "Although I cannot guarantee when or if I will be able to make amends and relaunch [Encryption AI], I promise that I will make every effort to become a better person." Oh, well, in that case.