The Cardano Foundation is under intense scrutiny as it prepares to release a treasury audit addressing allegations that founder Charles Hoskinson misappropriated over $600 million worth of ADA tokens during the 2021 Allegra hard fork. The incident involves a 318 million ADA transfer, valued at $619 million, from presale addresses to Cardano reserves — a move that some claim was unauthorized.
Claims of Genesis Key Abuse and Ledger Manipulation
NFT artist Masato Alexander has accused Hoskinson of using a “genesis key” to rewrite the blockchain ledger, effectively transferring ADA tokens without the consent of original buyers. According to Alexander, the hard fork was a two-step process: first, erasing the original UTxOs and then reallocating the ADA to reserves controlled by Hoskinson’s team.
Alexander further claims that Cardano’s Move Instantaneous Rewards (MIR) feature was used to withdraw the funds from reserves, a mechanism typically reserved for governance rewards. He alleges that many original token holders were unaware of the transaction and did not reclaim their ADA.
In response, Hoskinson stated that most funds were either redeemed or donated to Intersect, a governance entity overseeing Cardano’s treasury. However, Intersect’s interim executive director revealed that they only received $7 million in funding, a fraction of the alleged $318 million.
Hoskinson Responds to Allegations
On May 6, Hoskinson took to X (formerly Twitter) to address the accusations, expressing disappointment over the community’s lack of trust. “It’s not possible for anyone to not take this personally,” he wrote, adding that the experience has left him “deeply hurt”.
Hoskinson also indicated plans to change his public engagement strategy, suggesting that he may hand over his X account to a media team after the audit report is released.
Meanwhile, Cardano’s ADA price dropped 4.6% to $0.7352, with trading volume increasing 27% to $1.05 billion as uncertainty over the treasury’s management continues to weigh on investor sentiment.
For many in the Cardano community, the controversy has raised critical questions about blockchain governance, ledger integrity, and transparency. The upcoming audit report is expected to address these concerns, but whether it will restore confidence remains to be seen.
