ADA Plummets 16% Following AI-Induced Chain Split on Cardano – FBI Investigates

Summary:
Cardano’s ADA token faced a significant decline of 16% on Friday due to a rare chain split in its blockchain, triggered by a malformed transaction created through AI instructions. The event disrupted services and caught the interest of the FBI investigating the incident for potential cyberattack motives.

Key Takeaways:

Cardano's ADA token dropped 16% after a chain split caused by a poorly structured transaction.
The chain split disrupted services and led to investigations by the FBI.
This incident exposed vulnerabilities in Cardano’s network due to a previously undetected bug.
Major exchanges paused ADA deposits and withdrawals until the network achieved consensus.
A user claiming responsibility stated they acted alone and did not intend to cause damage, but the co-founder insists it was a deliberate attack.

ADA Crashes 16% as AI-Generated Transaction Splits Cardano — FBI Investigates

Cardano’s Significant Network Disruption

On Friday, Cardano's ADA token experienced a sharp drop following a disruptive chain split, which was instigated by a malformed delegation transaction. This unexpected event created temporary confusion as the network split into two competing versions, attracting the attention of the FBI due to suspicions of a cyberattack.

After the disruption, ADA's value plummeted as much as 16% but later found some stability around $0.41. However, the token remains over 30% down over the past fortnight as investors await updates from ongoing investigations.

Overview of the Chain Split Incident

Details shared by Intersect, the governance body of the Cardano ecosystem, revealed that the issue originated from a single delegation transaction using AI-generated instructions. This transaction validated on newer node versions but was rejected by older ones, leading to a fragmented blockchain.

As a result, nodes started building blocks on different branches of the blockchain, resulting in two distinct chains: one containing the malformed transaction and the other without it. Developers noted that this malformed transaction took advantage of a long-standing glitch in a core software library that had previously gone unnoticed.

The split echoed a similar event seen just a day earlier on Cardano's testnet, raising concerns that the exploit might have been tested before its mainnet launch. Although block production occurred on both chains, the network disruption affected wallet services, block explorers, and some decentralized finance (DeFi) protocols.

Impact on Exchanges and Transactions

During the resolution of the split, transaction confirmations slowed significantly or even failed altogether, causing major exchanges, including Coinbase, Upbit, and Kraken, to suspend ADA deposits and withdrawals until network consensus could be restored. Incidents like this are unusual for Cardano, which has maintained a stable operation for the last eight years without experiencing a comparable incident.

While no user funds were lost in the chaos, concerns emerged regarding potential orphaned transactions and isolated double-spend situations. Cardano’s co-founder, Charles Hoskinson, characterized the event as a deliberate attack, suggesting that a disgruntled stake pool operator had spent considerable time devising a way to damage Input Output Global (IOG), the entity responsible for Cardano's development.

Quick Response from Cardano Developers

In the hours following the split, an X account under the name “Homer J” claimed responsibility for the faulty transaction that led to the disruption. The user stated they were experimenting with AI-generated transaction instructions while deliberately blocking network traffic, clarifying that they did not intend to inflict any financial damage.

However, Cardano founder Charles Hoskinson dismissed this claim as a cover for a more calculated attack, and it was confirmed that the FBI had been notified. Intersect's forensic analysis indicated potential links to a participant from Cardano’s earlier Incentivized Testnet, prompting involvement from U.S. federal authorities.

Swift action from engineers at IOG, Intersect, the Cardano Foundation, and EMURGO led to the release of a patch within three hours. Stake pool operators were advised to upgrade their nodes to help realign the chain. By November 22, network consensus had been naturally restored, allowing major exchanges to resume ADA services, although Coinbase experienced the longest downtime of approximately 14 hours.

This event has drawn comparisons to previous chain splits in the cryptocurrency world, such as Bitcoin’s 2013 fork that occurred due to node-version discrepancies.