Covenant AI has announced its exit from the Bittensor network, and founder Sam Dare used the departure to launch a direct attack on Bittensor co-founder Jacob Steeves, known online as Const. In Dare’s statement, Bittensor’s central promise that no single entity can control the network is “a lie”.
The dispute comes just weeks after a leadership transition that was framed as a decentralization milestone. On February 13, 2026, Const stepped down as CEO of the Opentensor Foundation, and the project’s official X account described the moment as a “Satoshi Moment.” Around the same period, co-founder and COO Ala Shaabana, known as ShibShib, also left Opentensor for Crucible Labs. Covenant AI now argues that the public message did not match operational reality, saying Const never gave up actual control of the network.
On-chain review raises questions about upgrade control
Independent research group Tao Papers reviewed Bittensor’s on-chain history from 2023 to 2026. According to that review, the network recorded 41 runtime upgrades, and in 38 of those cases, the proposal key, first signature, and deployment hash all came from infrastructure controlled by Const. The two other signers typically signed within minutes, with no public discussion visible around the changes.
Dare described that structure as “decentralization theater.” His claim is that Const held effective control over the multisig process and could push through changes without genuine consensus, while the other signers mainly absorbed legal risk. He also outlined a sequence of actions affecting Covenant AI: token emissions tied to its subnet were cut off, removing a major source of revenue; then the team lost admin permissions over its own community channels, shutting down its public communication path.
The statement went on to say that Covenant’s subnet infrastructure was unilaterally declared deprecated. At the same time, Dare said Const carried out visible token selling in the market, adding pressure from the price side. He argued that the combined effect was meant to force the team into submission.
Covenant-72B was one of Bittensor’s best-known technical achievements
The fallout carries weight because Covenant AI was not a minor subnet operator. Last year, the team completed Covenant-72B, described in the report as the largest decentralized pretraining effort for a large language model at the time. The model had 72 billion parameters, used roughly 1.1 trillion tokens in training, involved more than 70 independent contributors, and ran on consumer-grade networking hardware.
Its best-known technical contribution was SparseLoCo gradient compression. The reported figures say the method reduced gradient synchronization requirements from 280GB to 2.2GB, a 99% drop, making distributed training workable on low-bandwidth nodes. On the MMLU zero-shot benchmark, Covenant-72B scored 67.1, outperforming LLaMA-2-70B and LLM360 K2.
NVIDIA CEO Jensen Huang had previously praised the project on the All-In Podcast, calling this type of distributed training “amazing.” After that attention, TAO rose 17% within 48 hours. An Anthropic co-founder had also cited related research. Within the Bittensor ecosystem, Covenant AI operated three subnets: Templar for decentralized pretraining, Basilica for decentralized compute, and Grail for decentralized post-training.
Team, research, and models are leaving with the project
Covenant AI said its team, research output, and models will all leave with it, and said a new project announcement is coming soon. That means Bittensor is losing not only a subnet team, but also one of the ecosystem’s most internationally recognized technical efforts and a notable share of developer momentum.
The market reaction was immediate. TAO fell from a prior daily high of $369 and was down more than 17%, trading near $268. With a circulating supply of 10.81 million tokens, the project’s market capitalization dropped to about $2.8 billion.
The report also noted that Yuma, a subsidiary of Digital Currency Group, has staked close to 19% of TAO supply. That ownership backdrop leaves the network’s governance path under close watch. Bittensor had not publicly responded to Covenant AI’s allegations at the time of the report.