I can no longer sftp to a specific site (one out of many that still work) from cyberduck on OS X. The site was working as configured. I can use sftp directly from a command line to the same site with the same credentials and it works ok.
Note that I have not changed anything on Cyberduck and this just stopped working. However, I have upgraded OSX in the interim.
I enabled logging and can see 2 related errors in the console log - about reading and writing errors to the known_hosts file.