Charles Hoskinson, the founder of Cardano, has long been a central figure in the cryptocurrency world. Cardano, whose native token is ADA, was built to provide a secure, decentralized infrastructure for financial services. Yet like many large blockchain projects, it has not escaped public controversy. In 2025, Hoskinson and Input Output Global (IOG)—the development company behind Cardano—faced allegations about the handling of ADA tokens distributed during the project’s early funding phase. The claims drew heated debate within the Cardano community and on social media. To resolve the matter, IOG commissioned an independent forensic investigation, which was released on September 2, 2025. The 128-page report found the accusations baseless, providing a rare, detailed audit of a blockchain project’s history. The Origins: Cardano’s Launch and Voucher Sales Cardano was launched in 2017 by three founding entities: IOG (then IOHK), the Cardano Foundation, and EMURGO. Unlike many projects that held initial coin offerings (ICOs), Cardano raised funds mainly in Asia—particularly Japan—through a voucher program that pre-dated the mainnet. Investors received “vouchers” that could later be redeemed for ADA tokens once the blockchain was live. A Japanese company, Attain Corp, distributed these vouchers, while a bespoke tool called the Ada Voucher Verification Mechanism (AVVM) generated unique redemption codes. This approach aimed to comply with regional regulations and avoid the legal pitfalls of ICOs. Redemption of vouchers began with Cardano’s Byron mainnet in 2017. By the time of the Shelley upgrade in July 2020, more than 97% of vouchers, representing nearly 99% of ADA, had been redeemed on-chain. After Shelley, the automated redemption mechanism was disabled; unredeemed vouchers could still be honored, but only through a new, off-chain, manual redemption process launched in November 2021. By August 2025, according to the independent audit, 99.2% of all vouchers had been redeemed, accounting for 99.7% of the total ADA sold through the program. The Spark: Allegations of Misuse Despite these high redemption rates, accusations emerged online in 2024–2025. Among the most vocal critics was NFT artist Masato Alexander, who alleged that approximately 318 million ADA—sometimes framed as “$600 million” depending on market prices—had been mishandled by insiders. Five main allegations circulated: That insiders at IOG or related entities stole or diverted ADA from unredeemed vouchers. That the original sales process in Japan used improper or misleading tactics. That protocol upgrades (such as Allegra and Mary) were intentionally designed to make voucher redemption more difficult. That upgrades deleted private keys or assets belonging to voucher holders. That insiders lacked the legal right to move or repurpose unredeemed ADA, including transfers to entities like Cardano Development Holdings (CDH). The claims gained traction on social media and risked undermining trust in the project. Hoskinson rejected them outright, arguing that nearly all vouchers had already been redeemed and that any remaining ADA was transparently managed. He also promised an independent audit, warning of possible legal action against those spreading defamatory statements. The Report: A Forensic Audit in 2025 To address the controversy, IOG engaged the law firm McDermott Will & Schulte and accounting firm BDO in May 2025. Their task: investigate voucher sales, redemption records, blockchain upgrades, and the treatment of unredeemed ADA. The investigators reviewed tens of thousands of documents, performed forensic blockchain analysis, and conducted 18 formal interviews with employees, service providers, voucher holders, and community members. Key findings included: Redemption rates: By August 2025, 99.2% of vouchers and 99.7% of ADA had been redeemed. Sales practices: The program was lawfully conducted in Japan, with no evidence of misleading tactics. Upgrades: Changes like the Allegra hard fork (December 2020, introducing token locking) and Mary (March 2021, enabling native tokens) did not block or delete redemptions. Allegations about “private keys” being erased were based on a mistranslation—vouchers used redemption codes, not cryptographic keys. Manual redemption: After 2021, IOG created a labor-intensive process requiring KYC, audio/video checks, and outreach by email, mail, phone, and in-person visits. Hundreds of additional vouchers were redeemed this way. Unredeemed ADA: At the close of Byron, 318.2 million ADA were unredeemed. These funds were temporarily staked to finance the manual redemption program. Later, 68.2 million ADA were transferred to Cardano Development Holdings (CDH), a Cayman trust, to support ecosystem initiatives. Of that, 24.15 million ADA went to a contractor, Input Output International, under a services agreement. The report’s conclusion was unambiguous: “Each of the allegations related to the Topics of Investigation does not have any basis.” Implications for Cardano and the Crypto Industry The report’s publication lifted a cloud that had lingered over Cardano. For Hoskinson and IOG, it was a vindication. For the broader Cardano community, it restored focus on development milestones instead of internal disputes. The audit also set a precedent. Blockchain projects rarely undergo such deep, independent scrutiny, even when accusations swirl. In this case, rigorous third-party verification provided clarity where social media debate could not. At the same time, the controversy illustrates broader challenges in crypto: the long lifespan of early token sales, the complexity of managing redemption mechanisms across major upgrades, and the way misinformation can spread rapidly without hard evidence. Conclusion Cardano’s voucher program was unconventional, and its redemption process spanned years and multiple upgrades. That complexity created room for misunderstanding—and eventually accusations. Yet the independent 2025 audit confirms that insiders did not misuse ADA, that redemption opportunities were provided extensively, and that the remaining unredeemed fraction was managed within legal bounds. For observers of the cryptocurrency world, the episode is a reminder: transparency and third-party audits are essential for building trust in a space where rumor often outruns fact.
