Bittensor Governance Crisis Erupts After Covenant AI Founder Accuses Co-Founder of 'Decentralization Theatre'

A high-profile exit from Bittensor has left the decentralized AI network reeling after its co-founder, Jacob Steeves, was accused of running a 'decentralization theatre' by one of his former collaborators.

The accusation comes from Sam Dare, founder of Covenant AI, who published an open letter on Friday accusing Steeves of suspending emissions to their subnets and orchestrating token sales during an internal dispute. The team had just achieved a major milestone in training a 72-billion-parameter language model distributed across more than 70 independent nodes worldwide.

Covenant AI sold 37,000 TAO tokens worth approximately $10.2 million on the open market following Dare's exit, causing TAO's price to fall over 20% and triggering over $10 million in long liquidations, according to CoinMarketCap data.

The governance crisis at Bittensor has been brewing for some time, with analysts noting that Steeves holds de facto control over the network despite its 'triumvirate' governance model. The Opentensor Foundation's three co-equal members propose upgrades, but critics argue real decision-making authority remains in Steeves' hands.

Bittensor's market capitalization sits at approximately $3.5 billion, with Grayscale having filed to convert its Bittensor holdings into a spot ETF. The investment case for any decentralized AI network depends on the premise that no single actor can unilaterally alter the rules, and evidence of concentrated control undermines this case directly.