Charles Hoskinson Denies SEC's Classification of ADA as a Security

In a recent twist to the ongoing regulatory crackdown on cryptocurrencies, Cardano’s founder, Charles Hoskinson, has vehemently denied the U.S. Securities and Exchange Commission’s (SEC) accusations that Cardano’s native ADA token should be classified as a security.

Hoskinson took to Twitter to address the allegations, highlighting key points that challenge the SEC’s claims. As the controversy surrounding the legal status of ADA deepens, both proponents and skeptics are closely monitoring the outcome of this high-profile dispute.

Cardano, an open-source, public blockchain platform, was launched in 2015 by Charles Hoskinson, a co-founder of Ethereum. The project gained attention for its rigorous and academically backed approach to blockchain development.

In 2017, Cardano conducted its initial coin offering (ICO) in Japan, generating significant interest and earning it the moniker “Japanese Ethereum.” ADA, the native cryptocurrency of the Cardano network, quickly emerged as one of the top cryptocurrencies by market capitalization.

Responding to the SEC’s allegations, Hoskinson took to Twitter, asserting that the ADA token did not qualify as a security. He pointed out that the financing for Cardano’s launch was carried out in Japan, with no direct ADA sales occurring.

Instead, vouchers were distributed, marketing was done in Japanese, and prices were set in Yen and Bitcoin. Hoskinson emphasized that no participants from the United States were involved in the process. By presenting these facts, Hoskinson sought to counter the SEC’s claims and assert that the ADA token was not offered as a security.

The financing was done in Japan, no ada was sold, only vouchers, marketing was in Japanese, priced in Yen and Bitcoin, no one from the United States participated. Ada launched in 2017 as an airdrop two years after the voucher sale. The facts might be inconvenient to the SEC, but…

— Charles Hoskinson (@IOHK_Charles) June 11, 2023

Crypto enthusiast and lawyer Bill Morgan supported Hoskinson’s argument, contending that the addition of functionality and marketing efforts for a product, as seen with ADA, does not equate to selling a security. Morgan’s perspective aligns with Hoskinson’s stance, emphasizing the importance of considering the specific circumstances and context surrounding Cardano’s ICO and the subsequent development of ADA.

In response to the SEC’s regulatory action against major cryptocurrency exchanges, Binance and Coinbase, Input Output Global (IOG), the company behind Cardano, issued a statement clarifying its position on ADA’s legal status.

IOG expressed its commitment to responsible legislation and collaboration with regulators, highlighting the importance of constructive engagement to ensure compliance with applicable laws. This proactive approach from IOG indicates a willingness to address regulatory concerns and work towards finding common ground.