Cardano Founder Threatens Lawsuit Over Token Manipulation Allegations

A wave of online allegations has placed Cardano founder Charles Hoskinson at the center of controversy, prompting him to respond forcefully and hint at upcoming legal action.

Cardano founder Charles Hoskinson has threatened legal action over allegations that he and the cryptocurrency project defrauded investors.

The claims were made by digital artist Masato Alexander in a series of posts on X, formerly Twitter. He said that Hoskinson and the Cardano development team used a past protocol upgrade to quietly seize 318 million ADA tokens.

Alexander said that the 2021 “Allegra” hard fork included hidden code that siphoned unspent tokens—originally allocated for Cardano’s initial coin offering—into the project’s reserves.

While a portion of the tokens was later redistributed by the team, Alexander said that a large chunk of the funds remained unaccounted for. He added that the Cardano team had been staking these funds to earn millions more in ADA rewards.

The digital artist went on to criticize the lack of transparency from the Cardano team, who he claimed had failed to provide a clear audit trail for the 2021 protocol upgrade.

“It’s mind-boggling how they can siphon 318M ADA in plain sight and expect no one to notice,” he wrote.

“They are still accruing millions in staking rewards with these stolen coins and no one is raising an eyebrow. Where is the outrage? Where is the accountability?”

However, Hoskinson has since intervened to flatly reject the claims as “lies” and misinformation.

In his own statement, Hoskinson explained that after the Allegra upgrade, the tokens in question became inaccessible through standard means and were placed into a custodial account managed by the Token Generation Event (TGE). This account, he said, was responsible for continuing token redemptions for eligible participants over the following three years.

According to the Cardano founder, 99.8% of ADA from the original ICO was eventually claimed by its rightful recipients, with the remaining 0.2% later returned to the TGE and donated to Intersect—a governance initiative also supported by the Cardano Foundation.

He added that the final report on the redemption process is yet to be released, but the vast majority of tokens were distributed as intended. Until the official documentation is made public, he said no further statements would be issued.

But Hoskinson warned that if the accusations continue, legal action will follow.

“We are now considering litigation. We will be sending retraction letters to those who continue to peddle this lie.”