Cardano Founder Faces $600M Misappropriation Allegations Amid Audit

An audit of Cardano's treasury is underway following allegations that founder Charles Hoskinson misappropriated over $600 million worth of ADA tokens. The controversy stems from a 2021 transaction during the Allegra hard fork, where 318 million ADA, valued at around $619 million at the time, was moved from presale addresses into the Cardano reserves. This move has sparked accusations of unilateral control and manipulation of the blockchain ledger.

Non-fungible-token artist Masato Alexander brought these claims to light, alleging that Hoskinson used a “genesis key” to rewrite the ledger. Alexander described the hard fork as a “two-step maneuver” that effectively erased the original UTxOs holding the ADA and reallocated them to the reserves controlled by Hoskinson’s team. Alexander also pointed to a second transaction involving Cardano’s “Move Instantaneous Rewards” (MIR) feature, which was used to withdraw the funds from reserves. He argued that most of the original token holders never reclaimed their funds and questioned how such a large sum could be moved without the consent of the original buyers.

Hoskinson addressed the claims, stating that the “vast majority” of the funds were either redeemed by original ICO buyers or donated to Intersect, the member-based organization involved in Cardano’s governance. However, according to Intersect’s interim executive director, the group received around $7 million in funding, far less than the alleged $318 million. It’s unclear how much, if any, of the withdrawn funds went elsewhere. Critics have also raised concerns about the lack of transparency surrounding the funds, which were reportedly staked and earned an additional 25 million ADA in rewards.

Hoskinson expressed frustration over the accusations and what he described as a lack of trust from the community. “It’s not possible for anyone to not take this personally,” he wrote on X. “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,” Hoskinson stated. He added that the experience has left him “deeply hurt” and he plans to change how he interacts publicly. “After the audit report comes out, I’m going to likely turn my X account over to a media team and change the format of my AMAs and X spaces.”

The upcoming audit is expected to provide clarity on the movement and use of the funds, but it may not be enough to resolve the community’s concerns. For many, the controversy has reopened old wounds about Cardano’s early token distribution and raised broader questions about accountability in blockchain governance. The allegations have also sparked a broader debate about the transparency and accountability of blockchain projects, particularly those with significant treasuries and centralized governance structures. The outcome of the audit will be crucial in determining the future credibility and community trust in Cardano.