Charles Hoskinson requests FBI investigation into Cardano network fork.

On November 21, the Cardano network experienced a split in its blockchain due to a transaction that took advantage of a bug in the node’s software. The split led to two competing chains, temporarily dividing a Block with a capitalization of almost $14 billion. The malicious transaction was able to bypass validation on new node versions but was rejected by the legacy infrastructure, causing inconsistencies in ledger states network-wide. This incident mirrored similar issues observed on the testnet a day prior, indicating prior testing of the exploit, according to experts at Cardano Intersect organizations.

Despite this situation, the network did not shut down. Block production continued on both networks throughout the incident. However, major exchanges responded by suspending ADA transactions until the blockchain’s integrity was restored. Coinbase, Upbit, Kraken, and other trading platforms temporarily halted deposits and withdrawals. Block explorers crashed, and DeFi protocols experienced an unstable state, with transaction confirmation times stretching to several minutes or halting altogether.

While the Bitcoin network has experienced public and planned forks, involving coordinated efforts from miners and the community, the Cardano incident resulted from a single transaction error. Cardano’s development team managed to implement emergency fixes within three hours of discovering the issue, and by November 22, the network was operational through natural consensus. The incident caused a 16% drop in the price of ADA before stabilizing at $0.41.

Following the incident, a developer named “Homer J” admitted to forking the blockchain, attributing his actions to carelessness during testing and apologized to the Cardano community. Co-founder Charles Hoskinson criticized the developer’s actions as a deliberate attack, prompting him to contact the FBI for investigation. Hoskinson’s decision to involve federal investigators led to the public resignation of an IOG employee from the developer Cardano.

In a social media post, a user named “effectfully,” identified as Roman, a Plutus language developer at IOG, expressed concerns about potential legal consequences due to future development errors. The user mentioned previous simulated cyberattacks and vulnerabilities discovered personally, emphasizing the need to address risks and avoid unwarranted legal actions.

The Cardano network’s resilience in the face of the fork incident highlights the importance of rapid response and effective communication in maintaining blockchain integrity. Despite the challenges posed by the exploit, Cardano’s development team was able to address the issue promptly and restore network functionality, underscoring the community’s commitment to security and stability. Moving forward, ongoing efforts to enhance security protocols and prevent similar incidents will be crucial to safeguarding the Cardano ecosystem.