Cardano founder Charles Hoskinson has firmly denied the U.S. Securities and Exchange Commission's (SEC) allegations that Cardano's native ADA token qualifies as a security.
"The facts might be inconvenient to the SEC but are facts," Hoskinson tweeted, pointing out that no ADA was sold in the U.S. and that the original financing was done in Japan with vouchers that were later converted into ADA in an airdrop in 2017.
His tweet came in response to lawyer and crypto enthusiast Bill Morgan who argues that adding functionality and marketing a product, as done with ADA, does not equate to selling a security.
Cardano was launched as an open-source, public blockchain in 2015 by Hoskinson, one of the co-founders of Ethereum. The project conducted its initial coin offering (ICO) in Japan, earning it the nickname "Japanese Ethereum."
At the time, Cardano was one of the largest ICOs ever held in Asia, and ADA quickly became one of the top cryptocurrencies by market capitalization.The project became known for its rigorous, peer-reviewed approach to blockchain development, but it continues to face criticism for being "vaporware" due to the apparent lack of viable use cases.
The SEC's allegations against Cardano came in the wake of bombshell lawsuits against cryptocurrency exchanges Binance and Coinbase. The regulatory body identified ADA as an unregistered security being offered on these platforms.
In a statement, IOG responded to the SEC's claims, arguing that the ADA token is not a a security "under U.S. securities laws." They claim that they have merely been improving and adding functionality to the Cardano blockchain, akin to a software developer enhancing a product, a process they maintain does not equate to selling a security.