TAO Crashes 27% After Covenant AI Exits Bittensor in Governance Feud

Bittensor’s ecosystem was shaken on Apr 10, 2026 after Covenant AI—the team behind the Covenant-72B model and one of the network’s largest subnets—announced it would abandon Bittensor. The news triggered a sharp selloff in TAO: the token fell about 27% in roughly two hours (around $338 to a low near $285), then rebounded slightly to about $294, with CoinGlass citing roughly $11M in long-position liquidations. The dispute centres on accusations of centralised control versus Bittensor’s “decentralisation” narrative. Covenant AI founder Sam Dare alleged Bittensor co-founder Jacob Steeves (“Const”) had unilateral influence, including claims of the ability to suspend subnet emissions, revoke moderation/community rights, and apply token-sale pressure to force compliance. Steeves denied these claims, saying he could not suspend emissions or deprecate Covenant’s channels and moderation rights. Traders also focused on “exit liquidity.” The later report says Dare may have sold/liquidated about 37,000 TAO across multiple subnets ahead of the public exit, amplifying sell-side pressure (and potentially worsening downstream users with TAO locked in Grail, Basilica, and Templar subnets). In response, Bittensor proposed a “lock-based subnet ownership” framework to better link subnet valuation to longer-term developer commitment and provide earlier notice around unlocks. For TAO traders, the near-term focus is whether governance reforms can reduce future sell-off risk and whether liquidity/narrative catalysts (including potential ETF headlines) can offset ongoing, governance-driven volatility in TAO.