Cardano founder Charles Hoskinson is preparing to take legal steps against individuals alleging that he manipulated the blockchain to take control of 318 million ADA tokens.
The accusations, which recently emerged on the social media platform X, suggest he used his Genesis keys in 2021 to seize funds belonging to early investors.
Cardano’s Hoskinson Accused of Secretly Altering Blockchain to Control ADA Funds
Last week, NFT artist Masato Alexander claimed that during the Cardano “Allegra” hard fork, the network overwrote certain unspent token allocations from the original token sale. It then rerouted those tokens to Cardano’s reserves.
“In 2021, the Cardano ‘Allegra’ Hard Fork (HF) wasn’t just a routine upgrade. It contained an extra payload. This HF effectively ERASED the original ICO UTxOs holding the ₳318M and swept the funds into the Cardano reserves,” Alexander wrote.
Alexander claimed that although they intended to reissue the funds to their rightful owners, they allegedly withheld a large portion.
He further claimed that only a small percentage of the tokens funded Intersect, a Cardano governance initiative. Most of the tokens, he alleged, were staked to generate an estimated 25 million ADA in additional rewards.
“Only a tiny fraction went to Intersect… Where did the VAST majority of that ₳318 MILLION actually go after being moved from reserves? Separately, the funds were staked, earning 25m additional,” Alexander alleged.
In addition, Alexander criticized the lack of clear documentation on the fund’s path, suggesting there is no verifiable audit trail.
However, Hoskinson has strongly rejected the allegations. In a response posted to X, he described the claims as “lies” and clarified that the ADA vouchers became unspendable following the Allegra hard fork.
The Cardano founder explained that these assets were transferred to a custodial account managed by the Token Generation Event (TGE). This account continued processing redemptions for three years.
“The Ada vouchers became unspendable after the hard fork. They were rolled into a custodial account controlled by the TGE that then continued redemption for 3 more years to distribute the genesis funds to the original buyers,” he said.
Hoskinson stated that original buyers eventually claimed 99.8% of the ADA sold during the ICO. He added that the team allocated only 0.2% of the tokens to fund Intersect.
“After seven years, the remaining 0.2 percent were returned to the TGE and donated to Intersect through the same process that funded the Cardano Foundation,” he added.
While the Cardano team has not released a full public report, Hoskinson noted that the redemption process is still ongoing.
He warned that he will sue Alexander and others who repeat the claims if they keep alleging that Input Output Global stole funds.
“As we are now considering litigation against those slandering us, 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,” the Cardano founder concluded.
