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GM, Tim here.

On Friday, Cardano suffered arguably its biggest attack ever.

A pseudonymous developer, hiding behind a picture of South Park antagonist Eric Cartman, used code generated by an AI chatbot to split the $15 billion blockchain in two.

Unintentional blockchain splits are highly undesirable because they undermine the core purpose of a blockchain: to provide a single, consistent, and immutable shared ledger of transactions.

It’s not clear if the incident was malicious or just a classic case of testing in production.

The developer behind the snafu apologised quickly for the mess he caused.

Yet that did little to soothe Cardano founder Charles Hoskinson, who told his one million X followers the attack was malicious and premeditated while announcing that he had called the FBI to investigate.

Cardano works so fast that we forked, fixed, and caught the guy all in one day. He was quite active in the Fake Fred discord. It was absolutely personal and now he's trying to walk it back because he knows the FBI is already involved https://t.co/MNK6d7bEWv

Hoskinson alleges the attacker, who goes by Homer J on X, had a deep knowledge of the Cardano blockchain and a personal grudge against him. Homer’s apology, Hoskinson said, came only after he realised his identity had been found out and reported to law enforcement.

DL News couldn’t independently verify whether Hoskinson has reported the incident to the authorities.

It’s an unusual episode even by the industry’s changing standards.

There’s a general sense that crypto has become more institutionalised in recent years, trading the often chaotic antics that previously defined the industry for stability and mainstream acceptance.

Yet the recent events on Cardano, the eleventh-largest crypto project no less, demonstrated that despite billions of dollars in institutional investment, crypto’s crazy side is as present as ever.

What’s more, the incident stands to damage Cardano’s reputation just as Wall Street players look to invest in the crypto industry on the back of clearer regulation in the US.

Although Cardano developers quickly patched the problem, the story doesn’t end there.

A post-mortem report from Intersect, a Cardano development firm, revealed that the bug Homer exploited had been in the blockchain’s code since 2022, although it couldn’t have been exploited until last year.

A day later, a developer at IOG, the development firm behind the Cardano blockchain, suddenly resigned, muddying the waters further.

“I’ve fucked up pen testing in a major way once. I’ve seen my colleagues do the same,” the developer, called Roman, said on X. “I didn’t realise there was a risk of getting raided by the authorities because of that.”

Roman’s post appears to be at odds with Hoskinson’s assertion that Homer’s actions were entirely premeditated and malicious.

What happens to Homer next is anyone’s guess. Even if Hoskinson has tipped off law enforcement, it’s not immediately clear what laws Homer broke.

As for Cardano, while the immediate issues from the chain split have been rectified, it will take much longer for the blockchain to fully recover.

“Every single user was impacted,” Hoskinson said. “It will take weeks to clean up this mess and even longer for the brand and reputation damage to be repaired.”

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Post of the week

It’s been a rough week for Cardano founder Charles Hoskinson. First, his blockchain was attacked. Now, he’s being pilloried on X.

There are countless people in crypto who have gigantic egos and yet Charles Hoskinson has managed to stay at the top of that leaderboard for over 10 years now. pic.twitter.com/TEMyZVPy7h

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.