«The Theater of Decentralization»: Scandal in Bittensor Leads to TAO Token Crash

In recent developments within the cryptocurrency sector, the project Bittensor has come under scrutiny following allegations of centralized control, which have caused a significant drop in the value of its TAO token. This controversy erupted after Covenant AI, one of the pivotal developers within the Bittensor ecosystem, announced its complete withdrawal from the network due to what it described as pressures and genuine centralization despite claims to the contrary.

Covenant AI’s Withdrawal and Allegations

The departure of Covenant AI sent shockwaves through the crypto community. The company accused Bittensor’s co-founder Jacob Steves (Const) of exerting unilateral control over the network. According to Covenant AI founder Sam Daire, this goes against Bittensor’s core promise that no single entity would dominate its ecosystem. The notion of decentralization was described by Daire as nothing more than “theater,” suggesting that real power remained concentrated with Steves.
Covenant AI highlighted several instances where they felt pressured: suspension of emissions for their subnets, restricted access to community moderation tools, unilaterally declared infrastructure deprecation, and economic pressure through strategic token sales at critical moments.

Market Reaction: Decline in TAO Value

Following these revelations, there was an immediate negative impact on the market. The price of TAO plummeted by approximately 18.5% within 24 hours, causing investors substantial financial losses as over $820 million in capitalization vanished from the ecosystem. Additionally, reports indicated that Covenant sold around 37,000 TAO tokens valued at approximately $10 million.
This downturn contrasts sharply with earlier gains seen in March 2026 when TAO experienced a surge exceeding 150% amid heightened social activity and growing interest in decentralized artificial intelligence solutions.

Bittensor’s Response and Future Prospects

While Jacob Steves did not directly respond to these accusations, he hinted at potential changes within Bittensor’s network architecture aimed at addressing these issues. He proposed introducing autonomous subnets functioning as tangible commodities and implementing a new model for subnet ownership based on locked tokens.
This approach aims to provide transparency for investors regarding owner actions while allowing them to reassess subnets prior to team decisions or redistribute capital among other participants.
Despite this turmoil, some voices remain optimistic about Bittensor’s future prospects without Covenant AI’s participation. Mark Jeffery from Bittensor Fund emphasized that “Bittensor is much more than just one subnet,” expressing confidence that TAO will continue thriving independently.
These events underscore ongoing debates around decentralization within cryptocurrency projects—a critical aspect for investor trust—and highlight how such controversies can rapidly influence market dynamics by affecting both investor sentiment and asset valuation significantly across global markets today.