Cardano Founder Charles Hoskinson Denies Hijacking ICO Funds, Calls Allegations 'Defamatory'

Cardano founder Charles Hoskinson has rejected claims that he secretly rewrote the blockchain's rules to take control of ₳318 million ADA (worth around $619 million at the time).

Crypto enthusiasts are closely following the unfolding saga of Cardano founder Charles Hoskinson, who has vehemently rejected allegations that he secretly rewrote the blockchain’s rules to seize ADA tokens.

The claims, made by crypto user Masato Alexander on X (formerly Twitter), center around unclaimed tokens from Cardano’s initial coin offering (ICO).

According to Alexander, a code update during the 2021 “Allegra” hard fork enabled Cardano developers to use a function called returnRedeemAddrsToReserves to sweep these tokens, valued at several hundred million dollars, into Cardano’s reserve.

This action allegedly removed the tokens from the original investors, many of whom were Japanese users who never redeemed them.

The claim further alleges that the funds were later moved using a type of transaction known as MIR (Move Instantaneous Rewards), typically used for distributing staking rewards or treasury payments. However, in this instance, it allegedly sent the ADA to a centralized account controlled by Hoskinson.

Charles Hoskinson Denies Hijacking ICO Funds, Claims Allegations Are Defamatory

Hoskinson has issued a strong denial of these accusations. He explained that the ADA vouchers had expired and become unspendable. The funds were then placed in a custodial account for further distribution to legitimate buyers.

He emphasized that this action was part of Cardano’s protocol and not an unauthorized ledger rewrite.

“The action was undertaken as part of a planned protocol upgrade to close down the expired and unclaimed portion of the crowdsale,” Hoskinson said.

He also issued a warning that if Masato Alexander continued to accuse him of theft, legal action would follow.

“We will be taking legal action against Masato Alexander and any other party who continues to make these claims,” Hoskinson added.

Hoskinson confirmed that he has issued a cease-and-desist notice to Masato Alexander.

Masato Alexander has continued to push back, claiming to have insider sources within Hoskinson’s team. He has demanded full records of how the 318 million ₳ ADA was used, including what was spent on development and what remained.

Charles Hoskinson responded that a portion of the funds went to Intersect, a Cardano-related governance body. This included 350 million ₳ ADA and an additional 25 million ₳ earned from staking.

However, Intersect’s interim leader, Jack Briggs, reported that the organization only received $7 million in 2024, raising questions about where the rest of the funds went.

Legal Action and Audit Report In Progress

In a new update posted on X on May 8, Hoskinson revealed that the Token Generation Entity (TGE), responsible for the original distribution, is concluding the redemption process and preparing an externally audited report.

The audit will comprehensively document the history of token allocations, from the initial crowdsale to the final distribution.

“We will be publishing a report from an independent accounting firm, which will include a statement of the TGE’s activities and a summary of the completed token distribution,” said Hoskinson.

Hoskinson expressed criticism towards those spreading the allegations, calling the claims “defamatory” and “factually incorrect.”

He explained that Attain, the vendor initially tasked with distributing ADA vouchers, went out of business, and the Cardano Foundation declined to assume control of the redemption, leading to delays and complications.

Despite these setbacks, Hoskinson maintains that 99.8% of all vouchers were redeemed correctly.

“We will make no further statements until the closing report is published. We will then send letters to the relevant parties demanding retractions and apologies,” said Hoskinson.