If it's deck stepped I guess water would be the most likely culprit. Judging where the crack is I would bet it is a keel stepped mast. I would guess stress crack from repetitive loading(underengineering). Rig tension probably has something to do with it.
I would TIG weld it immediately. Wouldn't worry about drilling holes, but I would not sail that boat like it is AT ALL. If I had to sail it before I welded it, I would drill the holes the other guys talked about and put a plate over that whole area and screw it to the mast with plenty of screws.
Other than replacing it, the sleeve idea seems to be appropriate enough. IF I had the mast on the ground I would consider adding 1/4"X4" aluminum strap to be TIG welded starting a few feet below deck to 3' above the deck on both sides of the mast, if it is keel stepped. Also I might use very very low heat along the top horizontal weld, high heat only along the sides. Because the horizontal weld along the top would be the next place the mast would crack.
If you have good insurance have them replace the mast sighting that welded masts are ugly. lol
Does anyone know if this boat is keel or deck stepped?