$TAO Price Crashes 20% After Covenant AI Walks Away from Bittensor

Covenant AI, a well-known player within the Bittensor ecosystem, announced today, April 10, 2026 that it is exiting from the Bittensor network. This exit has sparked turmoil within the decentralized AI space. Sam Dare, the founder of Covenant AI, the team behind subnets SN3, SN81 and SN39 have accused Bittensor co-founder Jacob Steeves, of wielding centralized control despite the network’s decentralized claims.

The statement was released through an X post and it highlights punitive actions which include suspended emissions to their subnets, stripped moderation rights over community channels, unilateral deprecation of their infrastructure, and alleged timed large-scale token dumps to apply economic pressure.

Covenant AI also highlighted its achievements, such as Covenant-72B, a 72-billion-parameter model trained permissionlessly across over 70 contributors on commodity hardware (also applauded by investor Chamath Palihapitiya  and Nvidia CEO Jensen Huang).

This project fueled a 90% rally in the Bittensor ecosystem and pushed the price of the token above the $300 mark. Yet, Dare has argued that these successes made them look like a threat to Steeves’ authority.

When a single actor can suspend a subnet’s emissions, override an owner’s authority over their own community spaces, publicly deprecate projects without process, and use token sales as a coercive mechanism to compel compliance, that is not decentralization. It is centralized control with decentralized branding.

-Sam Dare, Founder of Covenant AI

Accusation of Decentralization Theatre

The main point of conflict is Bittensor’s governance structure, a triumvirate multisig that is controlled by three individuals, and it is meant to ensure that there is shared decision-making.

Covenant says Steeves still has full control, with the other two mainly acting as “legal shields.” They claim updates were made without real agreement from everyone, which goes against Bittensor’s idea of open and decentralized AI. Dare said that the power was always with one person and they won’t build on a system that one person can control.

The team also emphasized that their mission still continues even beyond Bittensor. The founder in the statement stated:

Our research, our team, our models, and our vision go with us. We have very exciting projects and news underway and will be sharing announcements with the public very soon.

-Sam Dare, Founder of Covenant AI

They hinted at upcoming announcements and pointed to a shift toward new projects while encouraging the community to keep on pushing for genuine decentralization.

Counterclaims: Rug Pull or Retaliation?

After the statement was released, things started to move south. According to a crypto influencer on X, @JesusMartinez, Covenant’s Sam Dare sold 37,000 $TAO worth of subnet tokens from Grail, Basilica, and Templar, which were worth about $10 million at peak price. 

This is what caused big losses for followers who were backing the project after major hype, especially after Templar’s major pretraining progress. Many call it a very irrational decision that hurt investors, while others label it as a rug pull.

Critics speculate that the exit may have been planned, with token sales timed to benefit the team during the conflict. One person even said expecting people to follow them again after crashing the token is unrealistic.

Jacob Steeves Pushes Community Takeover, Blames Sam’s Exit

Jacob Steeves (@const_reborn) responded by saying that Sam’s leaving actually creates a room for the community to step in and take control of the subnets. He explained on Discord that the original plan was to have community voting, where token holders choose who runs things, but it was delayed early on. Now, Steeves believes that it is the right time to bring that system back and let the community revive the subnets.

Steeves also said he will take part in the process and may suggest a new team to continue the projects. He strongly criticized Sam, calling his actions driven by “malice and greed.”

In short, Steeves is blaming Sam, and he sees this situation as an opportunity for the community to take control.

Price Plunge And Market Impact

This whole situation has shaken the market, and $TAO, Bittensor’s main token, dropped 20% to around $262 today, April 10, 2026. Trading activity jumped, indicating instant panic among miners, validators, investors, and builders who believed in its open AI vision.

At press time, the price of the token stands at $262.49 with a drop of 18.48% in the last 24-hours as per CoinMarketCap.

In the short-term, $TAO is likely to remain volatile. In the long-run, the stability will depend upon various factors which include resolving current issues and rebuilding trust.

Also Read: Bittensor (TAO) Price Approaches $330 Resistance After 5% Spike