Cardano co-founder Charles Hoskinson has come under fire after a long-dormant controversy resurfaced, accusing him and the Cardano team of manipulating the project’s ledger to seize control of 318 million ADA tokens—worth approximately $619 million at the time. The allegations, which stem from a protocol change in 2021, have reignited debate over transparency and governance within the Cardano ecosystem.

The accusations gained traction after a lengthy thread posted by X user Masato Alexander began circulating widely on social media. Alexander claimed that Cardano developers deliberately used a protocol-level function to redirect unredeemed ADA from early investors—many of whom were elderly Japanese participants in the original ICO—into network-controlled reserves.

At the heart of the claim is a function named returnRedeemAddrsToReserves, which, according to Alexander, filtered out unredeemed UTxOs (Unspent Transaction Outputs) tied to the ICO. These tokens were then transferred to the Cardano reserves through a Move Instantaneous Rewards (MIR) transaction—typically reserved for treasury and staking allocations.

Charles Hoskinson was quick to respond. In a strongly worded post on X, he denied any wrongdoing and called the claims outright lies. He stated that the ADA in question had become unspendable after a hard fork and was subsequently placed in a custodial account managed by the Token Generation Event (TGE), which continued redemptions for three more years.

“You keep lying to people,” Hoskinson wrote. “The Ada vouchers became unspendable after the hard fork. They were rolled into a custodial account controlled by the TGE that then continued redemption for 3 more years to distribute the genesis funds to the original buyers.”

He also issued a direct threat of legal action, saying, “If you continue to imply that IO stole funds, I will sue you. This is my last warning.”

Despite the warning, Alexander didn’t back down. Instead, he doubled down on his claims, suggesting he had insider knowledge and was prepared to escalate the issue further. “Seriously doubt Charles wants to go through discovery,” Alexander replied. “Already know where to look as half his payroll has been talking to me for years.”

While the controversy has triggered a firestorm of opinions, not everyone agrees with the accusations. Crypto analyst Jonathan Morgan defended Hoskinson and the Cardano team, arguing that the transaction in question did not involve any manipulation of the ledger. Instead, he said the funds were redirected through an approved protocol upgrade—a common governance process in decentralized blockchain networks.

Morgan explained that the majority of the funds—around 300 million ADA—had already been returned to the original ICO participants through legitimate channels. The remaining portion, approximately 18 to 24 million ADA, was reportedly redirected toward Cardano’s community development initiatives, particularly through IntersectMBO, a governance-related organization.

Meanwhile, ADA’s price saw a modest increase amid the controversy. At the time of writing, Cardano’s native token was trading at $0.7052, marking a 4.39% gain over the previous 24 hours. Technical indicators suggest a potential breakout if ADA can convincingly clear the resistance zone between $0.70 and $0.80.

Whale activity is also on the rise, suggesting that larger holders may be anticipating a bullish trend. If momentum continues and ADA breaks through the $0.80 barrier, analysts believe the token could enter a new phase of upward movement, potentially reversing its previous bearish trend.

Although the controversy has cast a shadow over Cardano’s public image, the project’s fundamentals remain intact for now. With the market still digesting the implications, all eyes will be on whether legal threats turn into action—and whether ADA can ride the volatility to new highs.