Cardano Announces Audit for ADA Redemption Issue

Overview

Cardano announced that the ADA redemption issue will be audited by a third party, amid ongoing debates about a potential scandal.

The shadow of the 318 million Cardano (ADA) ‘redemption scandal’ from 2021 resurfaced over the weekend, igniting heated debate. Allegations of money laundering linked to the scandal have led Cardano’s legal chief, Joel Telpner, to warn against defamation. He stated,
> “But when statements cross the line and become defamation, they should not and will not be ignored.”

ADA’s ‘Redemption’ Saga

The alleged scandal hit crypto headlines in early May and implicated Cardano founder Charles Hoskinson. According to claims, the 318 million ADA unclaimed funds originated from early ICO (initial coin offering) participants who were reportedly unresponsive. Some believe these funds were misappropriated, raising accusations of scamming.

In defense, Hoskinson dismissed these allegations, stating that the Cardano team had made every effort to contact the participants. Cardano figure Daniel Tetsuyama explained that the unredeemed funds were reallocated according to regulations and were not ‘stolen’ as suggested.

Contrarily, some critics argue that ICO participants deserve reimbursement. To address these concerns, Telpner announced an independent audit will be undertaken:
> “There will be an audit conducted by independent third parties, whose findings will be made public. As a result, we know that this ongoing speculation on the ADA redemption process will, by necessity, give way to independently verified facts.”

Market Response

During this debate, Open Interest (OI) slightly declined below $400 million, indicating reduced speculative interest in ADA on the Futures market. Additionally, the Cumulative Volume Delta (CVD) dropped, indicating decreased demand in the spot market over the weekend, reflecting a slight cool-off after a recent rally.

On the price charts, ADA pulled back by 16% from its recent high of $0.86, following rejection at the upper range of a downtrend channel. Although the price dipped to $0.76, it still marked a higher low, with action remaining above short-term moving averages. This could signal short-term strength, though bulls must push ADA above $0.85 to secure a more positive outlook.