The Cardano Foundation is set to release an audit report addressing allegations that founder Charles Hoskinson misappropriated over $600 million worth of ADA tokens during the 2021 Allegra hard fork. The controversy involves a 318 million ADA transfer, valued at $619 million, which was allegedly moved from presale addresses into the Cardano reserves.
Ledger Manipulation and Unauthorized Transfers?
The claims were brought forward by Masato Alexander, an NFT artist, who alleged that Hoskinson used a “genesis key” to rewrite the blockchain ledger, reallocating ADA tokens to reserves controlled by his team. According to Alexander, the hard fork involved a two-step maneuver that erased the original UTxOs holding ADA and transferred them to the Cardano reserves.
Alexander also alleged that Cardano’s Move Instantaneous Rewards (MIR) feature was exploited to withdraw the funds, further claiming that many of the original token holders never reclaimed their assets.
In response, Hoskinson addressed the accusations on May 6, stating that the majority of the funds were either redeemed by original ICO buyers or donated to Intersect, a governance organization. However, Intersect’s interim executive director revealed that they only received $7 million, significantly less than the alleged $318 million.
Hoskinson’s Emotional Response and Community Distrust
Hoskinson expressed frustration over the allegations, taking to X (formerly Twitter) to convey his disappointment over the lack of trust from the community. He stated, “To not be given the benefit of the doubt here without strong evidence to the contrary means I don’t have the connection I thought with some people.”
The Cardano founder added that he plans to change his public communication strategy, possibly handing over his X account to a media team once the audit report is released.
Meanwhile, the ADA price dropped 4.6% to $0.7352, with trading volume rising 27% to $1.05 billion as concerns over the alleged mismanagement of the Cardano treasury continue to weigh on investor sentiment.
The audit report is expected to shed light on the movement and use of the funds, but it may not be enough to dispel growing doubts about Cardano’s governance and transparency.
