Cardano (ADA) experienced a significant price pullback of 16% as debates over the ICO-era “redemption scandal” resurfaced over the weekend. This controversy centers around the handling of 318 million ADA, which was reportedly left unclaimed by initial coin offering (ICO) participants back in 2021. The issue reignited heated discussions, some of which have been linked to accusations of money laundering. In response to these claims, Cardano’s legal chief, Joel Telpner, issued a warning against defamatory statements, underscoring that such remarks would not be ignored.

The scandal first emerged in early May, implicating Cardano’s founder, Charles Hoskinson. According to the allegations, the unclaimed funds, which were left by ICO participants who failed to redeem their tokens, were allegedly repurposed for other uses, triggering accusations of fraud and misappropriation. Hoskinson, however, has strongly denied these allegations. The Cardano team has also defended its actions, stating that every possible effort was made to reach out to the ICO participants, and that the funds were handled in compliance with regulations.

Daniel Tetsuyama, a key figure in the Cardano project, further clarified that the unredeemed funds were reallocated according to the regulatory framework and were not “stolen” as suggested by critics. Despite these clarifications, a segment of the Cardano community continues to believe that the ICO participants were unfairly deprived of their rightful tokens and should be compensated.

In order to resolve the speculation and set the record straight, Telpner confirmed that an independent third-party audit would be conducted to examine the redemption process. The findings of the audit will be made publicly available, which the Cardano team hopes will put an end to the ongoing rumors and provide transparent, verified information regarding the issue.

The timing of this controversy has affected ADA’s market performance. Data from the crypto markets indicates a slight decline in Open Interest (OI) on ADA futures, which dropped below $400 million. This suggests a reduced appetite for speculative trading in ADA. Furthermore, the Cumulative Volume Delta (CVD) for ADA on the spot market also fell, indicating a decrease in demand for the token over the weekend.

As a result of these events, ADA’s price has retreated by 16% from its recent high of $0.86. The cryptocurrency faced resistance at the upper end of a downtrend channel, ultimately causing a drop to $0.76. However, the price still remains above short-term moving averages, which could be seen as a sign of potential short-term strength. For ADA to maintain bullish momentum, it will need to break decisively above the $0.85 level, which would signal that the current downtrend has been reversed.

While the controversy surrounding the redemption process has created uncertainty in the market, the outcome of the upcoming independent audit could have significant implications for Cardano’s reputation. If the audit clears the project of any wrongdoing, it may restore confidence among investors and traders, potentially reigniting ADA’s bullish rally. Conversely, if the audit reveals mismanagement or malpractice, it could lead to further price declines and damage the project’s credibility.

In the meantime, the debate continues to cast a shadow over Cardano’s recent price surge. The market will closely monitor the results of the audit, as they will likely determine whether ADA can continue its rally or whether the “redemption scandal” will have lasting effects on the project’s future. For now, ADA remains in a precarious position, navigating both market fluctuations and the fallout from this resurfacing issue.