Cardano's First Major Split! Developers Rely on AI to Test Transactions, Founder Reports to FBI

Cardano, a $14 billion blockchain, experienced its first major chain split in eight years of operation, temporarily dividing into two competing chains. A developer admitted responsibility on X, stating they “foolishly relied on AI instructions” while attempting to test a malicious transaction. Founder Charles Hoskinson called the developer’s actions “entirely personal vendetta” and claimed “the FBI has gotten involved.”

The Story of Cardano’s First Chain Split in Eight Years

(Source: Intersect)

The incident began around 08:00 UTC, when a malformed delegation transaction bypassed validation checks on new version nodes but was correctly rejected by older infrastructure, causing incompatible ledger states across the network. According to an incident report from Cardano ecosystem organization Intersect, this anomaly closely resembled an issue that appeared on the Cardano testnet the day before, indicating that the vulnerability had been tested before being released to mainnet.

This bug had existed in the node software for three years, but only triggered catastrophic effects when the deliberately crafted transaction was broadcast to the mainnet. Intersect’s report noted: “Notably, the network did not halt. Throughout the incident, block production continued on both chains, and at least some identical transactions appeared on both.”

This kind of technical “live split” is more dangerous than a total outage, because it means different nodes are processing transactions based on divergent ledger states, potentially causing double-spends or transactions confirmed on one chain but rejected on another. During the split, block explorers froze or displayed contradictory information. DeFi protocols became inconsistent post-split, and smart contract interactions could be executed on one chain while related transactions landed on the other.

Cardano transaction confirmation times, usually measured in seconds, stretched to minutes or completely failed as the network struggled during the split. This worsening user experience immediately raised alarms in the community, as developers and node operators began reporting anomalies on social media and Discord channels.

Exchanges Halt Trading and 16% Price Crash

Although the Cardano network was technically still running, major exchanges suspended ADA trading to monitor which chain would ultimately reach consensus. The largest US crypto exchange had the longest downtime, suspending deposits and withdrawals for about 14 hours from November 21, 12:15 UTC to November 22, 02:10 UTC. Other major exchanges implemented shorter suspensions while verifying ledger integrity.

This caution was necessary. During a chain split, if an exchange processes deposits or withdrawals on the wrong chain, it could result in loss of funds. Historically, the Ethereum Classic (ETC) and Ethereum (ETH) split caused millions in losses for some exchanges due to mishandling replay attacks.

The market reacted quickly and sharply. After the incident, ADA’s price dropped 16%, from about $0.49 to $0.41. This selloff reflected investor concerns over the stability of the Cardano network. Although prices later rebounded slightly, The Block’s Cardano price page showed ADA still trading near $0.41, indicating market confidence has yet to fully recover.

During the emergency coordination between Input Output Global (IOG), the Cardano Foundation, Intersect, and EMURGO, the network split lasted several hours. The Cardano development team deployed an emergency patch within three hours of identifying the issue, which helped alleviate market panic to some extent. The network returned to normal via natural consensus on November 22, meaning most nodes ultimately chose the same chain as the main one, while the other chain was abandoned.

Developer Apologizes: “Stupid Enough to Trust AI Instructions”

Within hours of the incident, X user “Homer J” publicly admitted to causing the chain split, calling it a “careless” testing accident and apologizing to the Cardano community. His explanation revealed a shocking detail: the incident stemmed from blind trust in AI tools.

“At first, I just wanted to challenge myself to see if I could reproduce the bad transaction. I was stupid enough to actually trust the AI’s instructions, and without sufficiently testing on the testnet, I blocked all incoming and outgoing traffic on my Linux server,” Homer J wrote on X. “I’m ashamed of my carelessness and take full responsibility.”

This confession exposes a growing issue in software development: developers over-relying on AI coding assistants (like ChatGPT, GitHub Copilot, etc.) without fully understanding or testing the AI-generated code. In this case, the AI may have suggested a certain network configuration or transaction construction, and the developer executed it without proper verification, ultimately triggering the mainnet vulnerability.

Homer J’s Mishap Workflow

Step 1: Attempt to locally reproduce the problematic testnet transaction

Step 2: Ask an AI tool how to construct the transaction

Step 3: Execute AI suggestions directly without testnet verification

Step 4: Accidentally trigger a three-year-old vulnerability on mainnet

Step 5: Cause Cardano’s first-ever chain split

Hoskinson’s Hardline Response and FBI Involvement Controversy

Although Homer J apologized, Cardano founder and IOG co-founder Charles Hoskinson posted on X that the developer’s actions were a “deliberate attack.” Hoskinson wrote: “This is entirely a personal vendetta, and now he wants to walk it back because he knows the FBI is involved.”

A statement from Intersect and Hoskinson claimed, “Relevant authorities and law enforcement agencies have been notified” of the developer’s actions. This move to criminalize a technical incident sparked intense debate in the crypto community. Supporters argue that if Homer J’s actions were truly intentional, involving law enforcement is reasonable as it could constitute computer fraud or a cyberattack.

Critics, however, say Hoskinson’s response is excessive and could have a chilling effect on the open-source developer community. If developers risk criminal investigation for accidental mistakes, it could discourage contributions to Cardano and other blockchain projects. The core of blockchain is decentralization and censorship resistance, and seeking government law enforcement assistance seems contrary to this ethos.

IOG Employee Resignation Sparks Developer Community Panic

Hoskinson’s decision to involve the FBI led an IOG employee to publicly announce their resignation from the Cardano development company. X user “Effectfully” stated he was Roman, an IOG Plutus language developer confirmed in the Haskell Foundation’s 2024 podcast. He revealed he had previously made mistakes in simulated network attacks and was concerned future development errors could result in legal consequences.

“I never expected to be raided by authorities just for saying something mean online,” Effectfully wrote in an X post. “For context, most of the ledger bugs were either directly found by me or originated from my ideas.” This suggests many of Cardano’s security improvements actually came from developers proactively seeking out and reporting vulnerabilities. If such actions could now lead to legal investigation, developers may become more cautious or even leave the project.

This resignation triggered deep reflection within the Cardano community. Open-source blockchain projects rely on the voluntary contributions of global developers, which often involve exploring system boundaries and finding potential vulnerabilities. If developers face criminal investigations for unintentionally triggering bugs, the whole open-source model could be threatened.