NFT artist and crypto activist Masato Alexander claimed that in 2021, Charles Hoskinson used genesis keys to alter the state of the Cardano network and transfer 318 million ADA — worth around $619 million at the time. He alleges that the funds belonged to ICO participants and that the decision was made without their knowledge or consent.
Accusations of “Rewriting” the Blockchain
According to Masato, the head of Cardano and IOG “unilaterally rewrote” the Cardano ledger using genesis keys, gaining control over 318 million ADA stored in unclaimed addresses belonging to presale participants.
It is believed that this amount was held in the network’s structure as unspent UTxOs left over from the ICO. In 2021, during the Allegra hard fork, code was allegedly introduced to delete these UTxOs and transfer the funds to Cardano’s reserves. As indicated in the source code, the function returnRedeemAddrsToReserves was used to move balances from “redeemer” addresses to the network’s reserves.
Two-Step Operation: First the Hard Fork, Then MIR
Masato claims that after the hard fork, a Move Instantaneous Rewards (MIR) transaction was executed, which allowed the funds to be withdrawn from the reserves. This allegedly enabled IOG to use the funds without consulting the token holders.
Hoskinson stated that “the vast majority” of these ADA tokens were redeemed by real buyers over a span of seven years and that the remaining funds were transferred to Intersect — an organization supporting the development of the Cardano ecosystem.
Where the Funds Went
Alexander challenges at least two key assertions made by Hoskinson. First, he claims that most of the funds were never actually claimed: the IOG team allegedly failed to contact the majority of token holders, especially after the original issuer, Attain, dissolved.
Second, according to his findings, Intersect received only about $7 million in fiat equivalent — a figure confirmed by Intersect’s executive director Jack Briggs (Jack B). Originally, the amount in question was nearly $700 million based on the value at the time of the transfer. Taking into account that Intersect is co-funded by IOG and Emurgo, IOG’s actual contribution to the project might have been even smaller.
Masato also pointed out a contradiction in Hoskinson’s statements: the MIR transaction for 350 million ADA was signed in October 2021. Meanwhile, Hoskinson claimed that most of the funds were redeemed over the next three years — which raises doubts given the long period before that when the funds remained unclaimed.
No Transparency
Masato’s main grievance is the lack of open and verifiable information. He asserts that no documentation was provided to confirm the legal right to transfer the funds, nor was there any detailed report on where exactly the funds were directed.
It also remains unclear on what basis IOG managed the funds, considering that Attain, the original token issuer, no longer exists, and buyers did not give consent for the redistribution of their investments.
Genesis and the Principles of the Crypto Industry
Alexander emphasizes that these were not technically generated funds at the network’s launch, but real investments — primarily from Japanese citizens, including elderly individuals, many of whom later complained about being misled.
“Not your keys, not your crypto,” he reminds.
He claims that Hoskinson’s actions violated one of the core principles of decentralization.
Hoskinson’s Response
In response, Hoskinson stated that the funds were not misappropriated and that the redemption process remained open for three years after 2021. According to him, most of the ADA was redeemed, and the remainder was directed toward Intersect’s development.
However, in comments, he avoids specific answers about the legal basis and transparency of the fund usage.
Masato calls it “one of the biggest unknown scams in the history of the crypto industry”. Against the backdrop of the accusation, the Cardano Foundation organization launched an independent audit.
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