Key Takeaways:
Bittensor’s TAO token fell nearly 25% on April 15, 2026, after subnet owner Covenant AI publicly exited the project and its founder dumped 37,000 tokens, citing concerns over centralized control within the decentralized AI network.
The real damage came from the token sale, which triggered a wave of panic selling and liquidations, analyst Michaël van de Poppe said. The large sale, executed by Covenant AI's founder, was seen as a major loss of faith from a significant network participant.
The sell-off saw TAO’s price drop sharply after Covenant AI accused co-founder Jacob Steeves of wielding excessive control over the project's governance mechanisms. The 37,000 TAO tokens dumped on the market exacerbated the decline, leading to a cascade of forced liquidations from other holders. This event brings the total token supply held by the Bittensor team and its advisors into sharp focus, a metric watched closely by investors in other networks like Ethereum and Solana.
This event could trigger a crisis of confidence in Bittensor's decentralized governance model, potentially leading to further sell-offs from other subnet owners and increased price volatility. It highlights the risks associated with perceived centralization in decentralized projects, which could deter future investment and participation until the governance issues are publicly addressed.
The controversy centers on the core promise of projects like Bittensor, which aim to create decentralized networks that are not controlled by any single entity. Covenant AI's public departure and accusations against a co-founder strike at the heart of this value proposition. The incident serves as a critical test for the Bittensor community and its ability to resolve internal governance disputes transparently. How the project responds in the coming weeks will be crucial for its long-term viability and its ability to compete with other decentralized AI platforms.
This article is for informational purposes only and does not constitute investment advice.
