Key Takeaways:
Visual artist Masato Alexander has asserted that a 2021 hard fork allowed the Cardano team to transfer 318 million ADA from presale wallets into reserves.
Intersect has confirmed it only received $7 million, significantly less than the claimed $619 million.
This controversy revives longstanding questions regarding Cardano’s initial token distribution and governance framework.
The Cardano Foundation is set to conduct an audit of its treasury holdings amid fresh allegations suggesting that founder Charles Hoskinson misappropriated over $600 million in ADA tokens.
The allegations stem from a transaction executed during the 2021 Allegra hard fork, wherein 318 million ADA—valued at approximately $619 million at the time—was transferred from presale wallets into the Cardano reserves.
This action has ignited accusations of unilateral control and manipulation of the blockchain ledger.
Cardano Faces Tough Questions Over ADA Transfers
Masato Alexander, the artist, has brought these claims to the forefront, alleging that Hoskinson employed a “genesis key” to alter the ledger.
In his assertions, Alexander characterized the hard fork as a “two-step maneuver” that effectively dismantled the original UTxOs containing the ADA and redirected them to reserves managed by Hoskinson’s team.
In 2021, Charles Hoskinson unilaterally used his genesis keys to REWRITE the Cardano ledger and take control of ₳318m ($619m)
By comparison, when the DAO hack happened in 2016, the Ethereum community forked over $60m.
One of the largest ledger reorgs in blockchain history:
— masato_alexander (@masatoalexander) May 7, 2025
He noted a secondary transaction involving the “Move Instantaneous Rewards” (MIR) function of Cardano, which was allegedly utilized to withdraw these funds from reserves.
Alexander raised concerns that many original token holders did not reclaim their funds and questioned how such a substantial amount could be withdrawn without the consent of those initial investors.
In response to the claims, Hoskinson stated on May 6 that the “vast majority” of the funds were either redeemed by original ICO participants or donated to Intersect, the governance-focused organization affiliated with Cardano.
According to Intersect’s interim executive director, the organization received approximately $7 million in funding, a stark contrast to the alleged $318 million. The fate of the remaining withdrawn funds remains uncertain.
Critics have voiced concerns over the opaqueness surrounding the funds, which reportedly generated an extra 25 million ADA in staking rewards.
Hoskinson expressed annoyance over the allegations, highlighting what he perceives as a diminishing trust from the community. “It’s not possible for anyone to not take this personally,” he remarked on X.
The one advantage in a crisis or an event that tests people is that you rapidly get to see who your friends truly are and who's fairweather. I'd like to thank all the support and kind words both privately and publicly.
The downside is that I believe there will be a cold…
— Charles Hoskinson (@IOHK_Charles) May 18, 2025
“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,” he emphasized.
He added that the situation has left him feeling “deeply hurt” and indicated a shift in his public engagements. “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 anticipated to shed light on the movement and usage of the funds, although skepticism may persist within the community.
The unfolding situation has reopened ongoing discussions about Cardano’s early token distribution and raised wider issues surrounding accountability in the realm of blockchain governance.
Cardano Market Dips as Hoskinson Defends Vision Amid Treasury Concerns
Following the allegations of treasury mismanagement, the price of ADA fell by 4.6% to $0.7352, while trading volume surged over 27% to $1.05 billion within 24 hours, as reported by CoinGecko.
In a recent interview, Hoskinson reaffirmed his commitment to Cardano’s long-term vision while acknowledging existing challenges within the network.
“We know what’s wrong, and we know how to fix it,” he asserted, responding to rising concerns from both investors and the broader crypto community.
Cardano has faced continual criticism for lagging in crucial areas such as DeFi growth and stablecoin adoption. Its total value locked within DeFi is reported to be under $320 million, compared to Solana’s impressive $7 billion.
Additionally, Cardano has not yet attracted major stablecoins like USDT or USDC, nor has it generated substantial interest among meme coin communities that have invigorated competing chains.
Nevertheless, Hoskinson highlighted Cardano’s $1.5 billion treasury as a significant advantage and framed the network as an ideal foundation for Bitcoin DeFi.
“It’s the biggest opportunity of our lives,” he stated. “And Cardano’s architecture is the best to unlock it.”
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