Bittensor rift: Covenant AI exits, TAO drops 15% on emissions/governance claims

Covenant AI, the team behind the Covenant-72B model, says it has exited Bittensor, calling the network “decentralization theatre.” The announcement followed renewed accusations that Bittensor founder Jacob Steeves (“Const”) effectively controls key governance in a “triumvirate” setup and resists power transfer. Covenant AI claims Steeves suspended emissions for its subnets, cutting income, and used large TAO token sales as “economic pressure.” Steeves denies these points, saying he cannot directly suspend emissions and that any emission changes are normal on-chain buy/sell activity; he also said moderation restrictions were temporary. Price reaction was immediate. After the exit, TAO fell more than 15% (over 24 hours). Sell volume reportedly spiked to the highest level since Dec 2024 ahead of the announcement, with some analysts viewing it as planned execution. Newer reporting adds another layer: a site called “Tao Papers” published internal documents and on-chain forensics alleging that from 2023–2026, Steeves-controlled infrastructure proposed, first-signed, and deployed 38 of 41 Bittensor upgrades, with other signers co-signing within minutes and without public discussion. Steeves pointed to a future plan for “headless” subnets but did not directly address emissions/governance-control claims. For TAO traders, this is a governance-and-alignment shock. Expect elevated volatility as narrative risk and token sell-pressure concerns compete with any rebuilding/roadmap expectations.