Key Highlights
- On April 10, 2026, Founder Sam Dare announced Covenant AI’s departure from Bittensor, accusing Jacob Steeves (Const) of centralized control and labeling its decentralization as “theatre.” The team cited suspended emissions, overridden moderation, and economic pressure.
- The announcement triggered an immediate sell-off, with TAO plunging up to 23% — dropping from around $332 to a low of $254, later hovering near $270 and erasing nearly $900 million in market cap.
- Critics accused Covenant AI of a “rug pull” after allegedly dumping ~37,000 TAO (worth over $10M). The incident highlights governance tensions in Bittensor and raises questions about its long-term recovery.
Covenant AI, a prominent builder in the Bittensor ecosystem, has announced its official departure from the decentralized AI network, triggering a sharp sell-off in the native TAO token.
In a strongly worded statement posted on X on April 10, 2026, Covenant AI Founder Sam Dare accused Bittensor and its key figure Jacob Steeves (known as Const) of undermining the network’s core promise of permissionless decentralization.
The team claimed that Steeves exercised outsized control, including suspending token emissions to their subnets, overriding community moderation, unilaterally deprecating infrastructure, and applying economic pressure through large token sales.
Covenant AI highlighted its own achievements, notably training Covenant-72B—billed as the largest decentralized LLM pre-training run in history—involving over 70 independent contributors on commodity hardware. The model had earned praise from industry leaders, including recognition from Nvidia’s CEO.
“We cannot in good conscience continue to build on a network where the foundational claim we make to our investors, that this infrastructure is decentralized and permissionless, is contradicted by the reality of how the network is actually governed,” the team said.
Instant crash in TAO price
The exit announcement quickly rippled through the market. TAO, which had recently traded above $330 amid positive momentum from institutional interest (including Grayscale’s ETF-related filings), plummeted as much as 23% within hours.
Market data from CoinMarketCap indicate the token fell from around $332 to as low as $254, with trading levels hovering near $270 at the time of publishing.
TAO’s market capitalization shed hundreds of millions, with some estimates citing nearly $900 million erased in a short window and over $9 million in long positions liquidated.
Community reaction to Covenant AI’s exit announcement was full of heated responses, with critics accusing Covenant AI of a “rug pull” or opportunistic dump of approximately 37,000 TAO (valued at over $10 million at prior prices).
“If this isn’t a hack: respect the principle, but rugging your own community is not the way to prove your point,” wrote a user in comments. “This looks like an exit. There was too much money locked in tokens. They had to blame someone so they could cash out at the top,” another user stated, claiming that Covenant AI announced exit just to cash-out on their tokens.
This episode highlights ongoing tensions in the Bittensor network between its ambitious vision for decentralized machine intelligence and questions about governance concentration.
While some see the event as a short-term trust shock that could stabilize, others worry it exposes deeper structural risks that may weigh on TAO’s recovery in the near term.
Covenant AI stated it will continue its mission of permissionless AI training on alternative platforms, with new projects forthcoming. As of April 10, 2026, the incident marks one of the most significant public controversies in Bittensor’s history.
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