Cardano (ADA) founder Charles Hoskinson recently denied rumors that he misappropriated over half a billion dollars worth of ADA from a community fund, yet doubts about his financial candor linger.
Despite the fact that he’s promised a full audit of Input Output Global (IOG) and even surrendered access to his social media to researchers in the wake of the scandal, skeptics are reinvigorated.
By Tuesday afternoon, Hoskinson announced that he was taking a break from X, referring people to his lawyer.
With few answers as to what happened with the “redemption scandal” and its 318 million ADA until auditors finish their report, a new theory about Hoskinson’s clandestine wealth is circulating on social media.
With untold millions in personal wealth accessible with just a couple of mouse clicks, critics doubt Hoskinson’s claims to have sold so little ADA. Looking closely at the words of his repeated claims, they insinuate that he might have sold financial claims to ADA tokens to avoid literal spot sales.
Alleging de facto sales that avoid literal sales
According to the theory, Hoskinson could have transferred or directed the transfer of ADA to asset managers who, in turn, sell shares to retail investors of exchange-traded products (ETPs) backed by those ADA tokens.
Hoskinson, given shares of these trusts or funds as consideration for his initial ADA contributions, possibly directed the eventual redemption of those shares after third-party purchases flowed into the ETPs.
This circuitous route could have allowed Hoskinson to honestly testify that he hasn’t sold spot ADA. Instead, he might have simply redeemed shares in trusts or funds holding his unsold ADA.
Depending on the structure and jurisdiction of the ETP, accredited investors with substantial holdings often have the ability to redeem shares for cash-in-lieu, as long as they’re willing to pay transaction fees to market-makers, asset managers, brokers, and/or authorized participants.
In other words, according to the allegation, Hoskinson might have had access to cash as a redemption option for his financial claims (shares) of technically unsold ADA.
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ETPs allow investors to buy ADA on global markets
ETPs with a 100% Cardano allocation include the 21Shares Cardano ETP, CoinShares Physical Staked Cardano, WisdomTree Physical Cardano, Bitwise Physical Cardano ETP, Wave ADA Yield Fund, and Valour Cardano ETP.
There are also many publicly-traded altcoin or index funds holding ADA in addition to other digital assets.
It’s not publicly known which funds, if any, hold ADA provided by Hoskinson or his companies or agents. Many of these funds have tens of millions of dollars worth of ADA under management.
Hoskinson has repeatedly affirmed his long-term commitment to ADA and his community of tokenholders. He has also repeatedly boasted about his wealth and multi-year tenure in crypto, spanning back to the founding days of Ethereum where he briefly served as a co-founder.
On countless livestreams and interviews, he scoffs at the idea that he needs to sell ADA in order to fund his lifestyle.
He’s referred to reporting on allegedly mismanaged treasury funds as “maximally viral clickbait” written by media outlets that care more about pageviews than the truth.
He vehemently denies allegations that he has obfuscated any sales or liquidations of ADA, affirming his support of the current audit by accounting firm BDO and law firm McDermott Will & Emery.
In the meantime, his community is anxiously awaiting the results of the IOG audit. On a tangent of critical speculation, they’re also interested in the whole truth of whether Hoskinson has sold financial interests to technically unsold ADA.
