Cardano Faces Temporary Chain Split After Malformed Transaction Exploit

Cardano experienced a brief chain split late Friday in U.S. hours after a malformed transaction was processed differently by older and newer node versions, causing a divergence in the network.

According to a post-mortem by Cardano ecosystem governance body Intersect, the incident occurred when newer nodes accepted the malformed transaction, while older nodes rejected it. This inconsistency exploited a bug in an underlying software library that the validation logic failed to catch. As a result, some block producers began building on a “poisoned” chain, while others remained on the canonical “healthy” chain, prompting emergency software patches and a network-wide upgrade.

The wallet responsible has been traced to a former testnet participant, and the situation is under investigation as a potential cyberattack. Developers quickly released patched node software, and operators were instructed to upgrade to restore uniformity to the network.

Exchanges and wallet providers paused deposits and withdrawals as a precaution. Intersect confirmed that no user funds were lost, and most retail wallets were unaffected because their components safely ignored the malformed transaction.

Cardano co-founder Charles Hoskinson described the event as a targeted, premeditated attack by a disgruntled stake-pool operator seeking to damage the brand and reputation of Input Output Global (IOG). He warned that the disruption affected all users—from block producers losing rewards to DeFi protocols encountering inconsistent states—and that full network uniformity could take weeks to restore.