The founder of Covenant AI announced the project’s departure from Bittensor last night, kicking off public accusations from both sides, and sending the subnet ecosystem down 26%.
Bittensor’s TAO token is the worst performer among the top-100 large-caps today, April 10, after a major subnet operator announced their departure from the ecosystem.
Yesterday evening ET, TAO plunged from around $338 to a low near $253 — a drop of roughly 25% — erasing close to $900 million in market cap, per CoinGecko data. The asset is currently down 20% over the past 24 hours, trading near $270 at press time.
The sell-off was triggered by an extended X post from Sam Dare, founder of Covenant AI, announcing the project’s departure from Bittensor, a decentralized artificial intelligence (AI) protocol.
In his statement, posted on X yesterday evening ET, Dare accused Bittensor founder Jacob Steeves (known online as “Const”) of exercising unilateral control over a network that presents itself as decentralized, alleging Steeves suspended emissions to Covenant’s subnets, stripped their moderation capabilities, deprecated their infrastructure, and applied economic pressure through large, visible token sales timed to moments of operational conflict.
“The entire premise of Bittensor… is that no single entity controls it,” Dare wrote. “That promise is a lie.”
Covenant AI operated subnets SN3, SN81, and SN39 — specialized sub-networks dedicated to specific AI tasks — and was the team behind Covenant-72B: the model whose reveal catalyzed a 90% TAO rally after Nvidia CEO Jensen Huang and investor Chamath Palihapitiya endorsed Bittensor’s decentralized AI training model on the All-In Podcast, as The Defiant reported previously.
Steeves pushed back in an X response on April 10, disputing each claim. He acknowledged selling some of his alpha holdings across Covenant’s three subnets, but said it was because they “were not running, and were on near 100% burn code” — and that the sales amounted to less than 1% of his total investment in the project.
He also denied having any ability to unilaterally suspend emissions, said Dare deprecated his own channels, and noted that visibility in token sales is “impossible to avoid” given his position.
Not everyone in the community is sympathetic to Dare’s account. Prominent Bittensor community member @DreadBong0 alleged that Dare dumped 37,000 TAO worth of subnet alpha tokens across the Grail, Basilica, and Templar subnets on the way out — a move that “completely destroyed the investments of everyone who followed and trusted these guys.”
DreadBong0’s X post called the alleged move a “rug for max extraction,” adding: “Maybe that’s wrong but that’s exactly how it looks to me.” The dump allegation has not been independently verified, and Dare has not publicly addressed it.
Subnet Ecosystem Suffers
The Bittensor subnets sector more broadly is down nearly 26% on the day per CoinGecko, with τemplar (SN3) — which had surged around 400% over the prior month to an over $150 million market cap — now down almost 63% in the past 24 hours.
Nearly $10 million in TAO long positions were liquidated in the past 24 hours, per CoinGlass data.
The Defiant had covered the TAO rally last month, noting the surge in Bittensor subnet tokens and the outsized role Covenant AI’s model played in driving enthusiasm.
The network has also attracted a wave of institutional interest, with publicly traded companies building TAO treasuries and, more recently, the potential conversion of the Grayscale TAO Trust into a spot ETF on the horizon.
This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.
