McDermott Will & Schulte and BDO to conduct an Investigative Report and Forensic Audit

Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. Always warm, always sunny. Sometimes Colorado. Today is September 3rd, 2025. I'm making a video about something very interesting and fun.

Let me read off a tweet. From our good friend Joel Telner, Chief Legal Officer at Input Output: "Dear Cardano community, as in May of 2025, IOG engaged McDermott Will & Emery and BDO to conduct an investigative report and forensic audit concerning the ADA voucher program redemptions, Cardano blockchain upgrades, and the use of ADA associated with unredeemed vouchers. The report is now complete. The 128-page investigative report and forensic audit, dated September 2nd, 2025, documents certain milestone events and decisions in Cardano's 10-year history and investigates a series of public accusations made on social media alleging wrongdoing concerning the topics of the investigative report and forensic audit. Public accusations included five principal allegations: 1.

Cardano insiders stole or otherwise misused ADA that should have been allocated to voucher holders. 2. Improper sales tactics were used in connection with the voucher program. 3. Cardano blockchain upgrades were designed to make it difficult to redeem vouchers.

4. Cardano blockchain upgrades deleted voucher holders' private keys or assets. 5. Cardano insiders had no legal right to send unredeemed ADA to CDH and decide how to spend it. I am pleased to report that the investigative report and forensic audit reached the following conclusions: "After review of tens of thousands of documents, a forensic on-chain and traditional forensic analysis, and 18 formal interviews of current employees, former employees, voucher holders, service providers, community members, and other third parties, the investigation determined that each of the allegations related to the topics of investigation do not have any basis.

" I encourage anyone interested to read the report. It may be found in its entirety here. It’s been a long ride, and I want to personally thank the Cardano community for your patience and support. I’d like to thank Joel, Laura Tanti, and all the people who had patience and worked on this as well. It was a lot of work.

Let’s go ahead and open that link up. This is the website, and this is the report in its entirety—128 pages. You can see the fifth-largest auditor in the world, one of the largest law firms in the U.S., and all the different people that worked on it.

Let’s read a little bit of it in the executive summary. The investigative report presents the findings of an investigation concerning the ADA voucher program, redemptions of vouchers, Cardano blockchain upgrades, and the use of ADA associated with unredeemed vouchers at the request of Input Output. McDermott and BDO jointly conducted the investigation. Input Output engaged McDermott and BDO in May of 2025 to conduct the investigation. This investigation documents certain milestone events and decisions in Cardano's 10-year history and investigates a series of public accusations made on social media alleging wrongdoing concerning the topics of investigation.

During the investigation, we reviewed tens of thousands of documents, conducted a forensic on-chain and traditional forensic analysis, and completed 18 formal interviews of current employees, former employees, voucher holders, service providers, community members, and other third parties. Prior to Cardano's mainnet launch, Sawyers issued vouchers for Attain to distribute to purchasers primarily in Japan. From September 2015 until January of 2016, Attain conducted five separate tranches and distributed 14,442 vouchers representing almost 26 billion ADA. Purchasers received a purchase receipt that they could use to create a voucher certificate. The voucher certificate contained a redemption code to claim ADA upon the mainnet launch of Cardano in September 2017.

Cardano's first era, called the Byron era, launched in September 2017. During the Byron era, three founding entities validated Cardano transactions and proposed and voted on upgrades with Genesis keys. During this period, voucher holders redeemed nearly 99% of ADA from the voucher program on-chain using Daedalus. As Cardano progressed towards decentralization, the Shelley upgrade allowed individual nodes to operate as SPOs and allowed ADA holders to delegate to SPOs. When the Shelley upgrade occurred, voucher redemptions were paused.

Therefore, during the Alonzo upgrade, the remaining unredeemed ADA was swept into the reserve to implement a manual off-chain redemption process. To fund the costly process of locating and redeeming the 390 vouchers, Sawyers staked 318,200,560 unredeemed ADA with Wave, using the staking rewards to pay employees and service providers, including private investigators and lawyers. After multiple years of on-the-ground efforts, Sawyers rightfully sent 68,250 ADA, which was a portion of the unredeemed ADA, to CDH Cayman Trust. The sources of public allegations against Input Output and Hoskinson are not from unredeemed voucher holders. Additionally, we were not aware of any pending lawsuits or regulatory actions concerning voucher redemptions.

We also did not identify evidence indicating that Input Output or Sawyers turned away any potential voucher holders who possessed a valid voucher. Throughout the voucher program's original sale, reasonable guardrails were put in place to prevent deceptive sales tactics. Reasonable efforts were implemented to prevent deceptive marketing and sales tactics. For example, the voucher program contained specific marketing terms and conditions that prohibited deceptive marketing tactics, including a prohibition on any representations regarding the value of ADA. There were at least 19 instances where distributors were accused of violating these marketing restrictions, and after further investigation, 17 were eventually suspended by Attain.

The voucher program was not designed to exploit the elderly. Only 6% of vouchers were sold to participants over the age of 65, and 94% of participants in the voucher program were under the age of 64. Following public allegations concerning targeting elderly people in sales, efforts were made to contact and offer refunds to voucher holders over the age of 65. As of the publication date of this investigative report, only 12% of the remaining unredeemed voucher holders are over the age of 65. During the Byron era, 97.

3% of all vouchers were redeemed on-chain, accounting for 98.8% of the ADA allocated to the voucher program. Only 2.7% of vouchers remained unredeemed at the end of the Byron era. During the Byron era, substantial efforts were undertaken to encourage voucher holders to redeem their ADA on-chain through Daedalus.

After Cardano's mainnet launched in September 2017, voucher holders were able to execute automated redemptions through a digital wallet called Daedalus. Significant efforts were undertaken to identify and educate voucher holders concerning how to redeem. These efforts included in-person seminars organized by Input Output throughout Japan called the Help Desk Tour over a period of two weeks in late September until October. The Help Desk Tour visited five Japanese cities: Tokyo, Osaka, Nagoya, Hiroshima, and Fukuoka. During these sessions, voucher holders brought their laptops and walked through a step-by-step process on how to redeem.

Voucher certificates contained redemption codes, not private keys, that conferred the ability to control, transact, and restore a particular digital wallet. The public accusations that voucher holders initially received cryptographic private keys, which were later deleted, are false. Voucher holders were provided a redemption code that could be used for an automated redemption of the voucher to receive ADA during the Byron era through a digital wallet. The redemption code is not and never was a traditional cryptographic private key. A private key can be used to send and receive cryptocurrency and can be created by a recovery or seed phrase to restore a wallet multiple times, which aspects of the redemption code could not accomplish.

The confusion about the redemption code appears to come from incorrect English translations of Japanese terms and conditions and other disclosures. For example, the language used in the Japanese terms that were actually provided to the voucher holders in Tranche 1 refers to a password, not a private key. Those same terms were translated to English by a sales organization that erroneously translated the Japanese word for password to private key. We obtained an independent certified translator who confirmed that the original Japanese language for Tranche 1 used the term password and that the English version erroneously translated the word to private key. Each witness with knowledge of the cryptography associated with the voucher program uniformly confirmed that the vouchers did not contain a traditional private key.

Instead, voucher holders were provided with a purchase receipt that permitted them to access the AVM and then generated a redemption code that the voucher holder could use to redeem ADA using Daedalus. The Shelley upgrade eliminated the automatic functionality of the redemption codes, but voucher holders did not lose the right to redeem vouchers. When the Shelley upgrade occurred, automated redemptions were no longer possible. Following the Shelley upgrade on July 29th, 2020, voucher holders had to redeem through a manual process. However, from July 2020 to November 2021, all forms of redemptions were paused while the manual redemption process was being constructed, resulting in a period where no redemption occurred.

The manual redemption process commenced in November 2021 and is still underway as of the date of this investigative report. To fund the manual redemption process called the post-sweep redemption, Sawyers staked the unredeemed ADA with Wave. The staking rewards were not misappropriated by any Cardano insider. As of December 2021, Sawyers sent the remaining unredeemed ADA to Wave. Wave managed the assets to generate low-risk staking returns.

BDO's review concluded that the staking rewards were primarily used to pay external vendors, private investigators, customer service consultants, and outsourced staffing costs pursuant to the post-sweep redemption project. Voucher holders do not appear to have been entitled to staking rewards. Notably, staking did not exist when vouchers were sold, and voucher program terms did not include a right to any future staking rewards. Beginning in December 2021, significant efforts were undertaken to locate and redeem remaining voucher holders. Sawyers set up a dedicated project team in 2021 to locate, identify, and manually process claims from unredeemed voucher holders.

Sawyers and its consultants collectively sent 4,269 emails, mailed 872 letters or welcome boxes, made 3,235 calls, and conducted 402 site visits through private investigators, successfully redeeming 246 voucher holders. As of August 15th, 2025, 99.2% of voucher holders, consisting of 99.7% of all ADA sold pursuant to the voucher program, have been redeemed through the on-chain redemptions and post-sweep redemption project. Voucher holders seeking to redeem post-Shelley upgrade were subject to substantial identity verification procedures, including the use of video and audio.

Certain voucher holders had to go through multiple attempts before completing these procedures. This caused some delays in redemptions, but the verification processes were implemented so Sawyers and its hired consultants could confirm the accuracy and completeness of the KYC information. Witnesses indicate that those procedures were not designed to dissuade redemptions. After years of effort to identify remaining unredeemed voucher holders, 68 million ADA was transferred to CDH Cayman Trust. This trust was created for the Cardano ecosystem and represented voucher holders who either waived their right to redeem or failed to engage in the post-sweep redemption effort.

The report goes on to discuss the MSA with IOI and includes a glossary of terms that goes through the entire history of these things, guardrails that were put in place for all the voucher holders. The number of voucher holders by age groups was verified with passports, as compliance data is there. In total, Sawyers sold vouchers that could be redeemed at 22,257 million ADA across tranches 1, 2, 3, 3.5, and 4, generating 108,000 Bitcoin. These are the addresses where the Bitcoin was reconciled.

The total amount of buyers and the total amount of vouchers are detailed in the report. Our investigation revealed that public accusations do not have any basis with respect to the earliest user policy. The report discusses the Help Desk Tours, the Genesis distribution, the blockchain upgrades, and the entities that were involved in the post-sweep redemption. Conclusion: after review of tens of thousands of documents, forensic on-chain and traditional forensic analysis, and 18 formal interviews, the investigation determined that each of the allegations related to the topic do not have any basis. So read it for yourselves.

It’s been a long road, and it’s been deeply frustrating. It’s an extraordinary thing; 10 years of my life has been put into a single document. You can see how much work went into this and all the effort that was put in. It took a while to get this out, and that’s the nature of forensic audits. We really appreciate the diligence and thoroughness that the people had, and hopefully, we can now just put this nightmare behind us.

It’s one thing to attack my intelligence, my physical appearance, my business acumen, and my integrity. It’s another thing to accuse me of a crime. It’s nice that we finally have some space between this so people can see. It’s also nice that we can explain the Cardano crowd sale finally and succinctly. Whenever anyone asks about the origins of Cardano, this is the canonical document where people can understand what happened and why it happened.

I’m very proud that 99.7% of the ADA is in the hands of the people who bought it, and the remaining set of people are entitled to a refund. Transactions can’t last forever, and all that’s detailed there. It’s in the report; it’s been verified. You can look at it—thousands of emails and documents and other things.

This is over. For the people who stirred this pot, do the right thing and just apologize. Have some common decency as human beings. Apologize and let’s all move on. Say you were wrong.

Have enough integrity to do that. You have it there; you asked for it. You don’t get the benefit of the doubt anymore. It’s hard when you have an ecosystem and a lot of people were supposed to show up. Attain was supposed to stay in business; they decided not to.

The foundation was supposed to deal with all this; they didn’t show up. We did our best, and you can see that thousands of emails and letters and other things were sent. Now you have some space to reflect on this and look at it, and hopefully, for the majority of you, you’ll realize that people went too far. For those who went too far, you’ll know who those people are and who to listen to and who not to listen to. Never accuse me of a crime; it’s too far.

It’s a red line. We didn’t cross that; it didn’t happen. You can read it; you can see it. It was extremely hard and time-consuming to go through all of this. The media won’t apologize; they’re just purveyors of misinformation.

But I leave it to everybody else to decide what their conscience tells them. So that’s it.