Cardano’s founder, Charles Hoskinson, has swiftly refuted the allegations made by the U.S. Securities and Exchange Commission (SEC) regarding Cardano’s native ADA token being classified as a security. In a strong response, Hoskinson took to Twitter to assert that:
He emphasized that no ADA tokens were sold within the United States. He clarified that the original financing took place in Japan through the issuance of vouchers, which were subsequently converted into ADA tokens during an airdrop in 2017.
The debate was sparked by lawyer and crypto enthusiast Bill Morgan, who contended that the enhancements and marketing efforts surrounding ADA did not equate to the sale of a security. Hoskinson, backed by his extensive knowledge of the industry, firmly disagreed with the SEC’s perspective and stood by the notion that ADA should not be categorized as a security.
Cardano Faces SEC Allegations: ADA’s Unregistered Status On Exchanges
Cardano introduced as an open-source, public blockchain in 2015 by Hoskinson, who is also one of the co-founders of Ethereum, gained significant traction during its initial coin offering (ICO) held in Japan. The project’s ICO was one of the largest in Asia at the time, leading to Cardano being dubbed the “Japanese Ethereum.” Following its successful launch, ADA rapidly ascended the ranks to become one of the leading cryptocurrencies based on market capitalization.
While Cardano has received praise for its meticulous approach to blockchain development, it has also faced criticism for its perceived lack of tangible use cases, leading some to label it as “vaporware.” The SEC’s allegations against Cardano came amidst high-profile lawsuits targeting major cryptocurrency exchanges such as Binance and Coinbase. The regulatory body identified ADA as an unregistered security being offered on these platforms, igniting concerns within the crypto community.
Responding to the SEC’s claims, IOG (Input Output Global), the company overseeing Cardano’s development, released a statement vehemently refuting the allegations. IOG asserted that ADA does not meet the criteria to be considered a security under U.S. securities laws. They emphasized that their focus has been on improving and expanding the functionality of the Cardano blockchain, comparing their role to that of software developers enhancing a product. According to IOG, this process does not involve the sale of a security.
The firm stance taken by Charles Hoskinson and IOG in response to the SEC’s allegations underscores their conviction that ADA should not be classified as a security. The outcome of this ongoing dispute holds significant implications not only for Cardano but for the wider regulatory landscape surrounding cryptocurrencies. As the crypto industry continues to evolve, clarity on how different tokens are classified and regulated will play a crucial role in shaping its future.