Notes · Free · Court records to October 19, 2026; ledger to October 24, 2026 · Revised October 24
Hedera's two grantee lawsuits: what the court record and the ledger show
Since late 2021 Hedera's treasury has released about 14.2 billion HBAR, roughly 28% of the fixed 50 billion supply, under its ecosystem development program (Hedera treasury report). Our reading of the ledger puts about 95% of it with three grantees: nearly 11 billion HBAR to the HBAR Foundation (now the Hedera Foundation), about 1.9 billion to the Swiss Hashgraph Association, and about 0.8 billion to the DLT Science Foundation, now Exponential Science. The account matches are ours; the Hashgraph Association figure is medium confidence, the other two high. Hedera's Council named all three when it approved further ecosystem funding in January 2024 (Hedera, January 12, 2024). In 2026 Hedera sued the last two. It alleges that Exponential Science will not return unspent funds after moving $76 million to affiliates, and that the Hashgraph Association's two principals caused it to commit or transfer $52 million or more of grant-derived value to a venture fund they control. The defendants dispute or have rejected Hedera's claims. This note sets out what the filings, the foundations' reports and the ledger show. It takes no side.
The short version
| Exponential Science (ESF) | The Hashgraph Association (THA) | |
|---|---|---|
| Case | 652870/2026, filed May 15, 2026 | 655628/2026, filed Oct 4, 2026 |
| Defendants | Four ESF entities (Cayman and Switzerland). No individuals. | THA, The Hashgraph Group AG, Hashgraph Ventures Fund I LP, and personally Kamal Youssefi and Stefan Deiss |
| Grant paid | More than 800M HBAR, about $46.6M at the time, 2022–2024 | Not stated in the complaint. Hedera earmarked $16.3M for the first program in 2022; the "Phase B" plan of 2024 allocated $10M a year to the fund. |
| Hedera's central claim | $76M moved to affiliates in Oct 2025; unspent funds not returned after termination | $50M committed or transferred from THA, plus $2M from THG, to a fund the principals own, without consent; $30M more than disclosed |
| Claims pleaded | Contract, good faith, unjust enrichment, declaratory relief, alter ego | The same, plus fraudulent inducement, voidable transfers, conversion, money had and received (see below) |
| Defence so far | Motions to dismiss filed Oct 6: only "Uncommitted" funds must be returned and none are alleged; the amendment allowed the transfers | None filed. THA rejected the termination by letter on Aug 6 and said on Oct 9 it will respond through legal channels |
| On the ledger | 611.8M HBAR matched by amount and date to a treasury payment into a Binance-listed deposit account; it reached an apparent cold wallet 21 minutes later | About 1.93B HBAR in 2022–2024 to two accounts we match to THA by timing and amount (medium confidence) |
Case 1: Exponential Science
Timeline
| Date | Event | Source |
|---|---|---|
| Aug 14, 2022 | Grant agreement signed with DSF OpCo Ltd (the DLT Science Foundation). Initial tranche $12,753,333 in HBAR; up to $161.86M at Hedera's discretion. | Complaint ¶22; Doc 26 |
| Sep 22–27, 2022 | 192,569,025 HBAR (five payments of 38,513,805) goes from the treasury to 0.0.16952, an account that sweeps into Binance's hot wallet (see below). | Ledger |
| Jun 2024 | DSF assigns the agreement to Exponential Science Foundation (Cayman). | Complaint ¶23 |
| Sep 5, 2024 | First Amendment: a second tranche of $33.8M in HBAR, converted at the higher of the prior month's average opening price or $0.05. | Complaint ¶24; Doc 27 |
| Sep 23, 2024 | 611,789,862 HBAR leaves Hedera's treasury account and, in two further hops, reaches an apparent exchange cold wallet 21 minutes later (see below). | Ledger |
| May 30, 2025 | Second Amendment: transfers among listed group entities and 100%-owned subsidiaries allowed with "no Hbar or US Dollar limit"; up to 20% of liquid treasury a month may be used for treasury management, including hedging. | Complaint ¶26; Doc 28 |
| Oct 20, 2025 | ESF Cayman transfers assets worth about $76M to three affiliates: $52.7M to ES Capital, $19.9M to ES OpCo, $3.4M to ESF Switzerland (as ESF later described it to Hedera). | Complaint ¶45 |
| Dec 31, 2025 | ESF reports a combined "DSF & ESF" treasury of $70.5M: 335.7M HBAR ($35.7M), $14.2M stablecoins, $2.9M other crypto, $17.7M fiat. | Q4 2025 report, Doc 30 |
| Feb 25, 2026 | Hedera gives notice of termination, without cause, effective May 26, 2026. | Complaint ¶37 |
| Apr 2, 2026 | ESF provides a balance sheet for ESF Cayman alone as of Mar 31: under $1M. | Complaint ¶41 |
What the ledger shows
The payment forms in the exhibits leave the account-ID box blank, so the match below is ours, by amount and date. On September 23, 2024, treasury account 0.0.81 sent 611,789,862 HBAR to 0.0.1873771: $33.8 million at about $0.0552, in line with August 2024's average opening price as the amendment's formula requires. The first tranche matches too: between September 22 and 27, 2022, the treasury paid 192,569,025 HBAR in five equal payments to 0.0.16952, which is $12,753,333 at $0.0662. The two payments total 804.4 million HBAR, in line with Hedera's "more than 800 million HBAR". We rate both matches high confidence.
| Time (UTC) | From | To | HBAR | Transaction |
|---|---|---|---|---|
| Sep 23, 2024 14:00:06 | 0.0.81 (treasury) | 0.0.1873771 | 611,789,862 | view |
| 14:13:01 | 0.0.1873771 | 0.0.1030878 | 613,663,490 | view |
| 14:21:41 | 0.0.1030878 | 0.0.652978 | 611,472,056 | view |
The payment carried a nine-digit numeric memo, as exchange deposits do. HashPack's list of exchange deposit accounts places 0.0.1873771 and 0.0.1030878 under Binance (HashPack notes a match is not proof of current control). 0.0.16952, which received the 2022 tranche, is not on that list, but it has forwarded HBAR to the Binance hot wallet 0.0.1030878 more than 2,000 times. The ledger also fits for the 2024 payment: 0.0.1873771 took deposits from 1,945 senders in October 2024 and sweeps to 0.0.1030878, which feeds 0.0.652978, an unlisted account holding about 2.1 billion HBAR that behaves as a cold wallet. None of the three is staked, so any HBAR yield Binance pays through its Earn products would come from Binance, not from these accounts' network rewards. The payment form has ESF warrant that it owns, or has a contract with the owner of, the receiving account, so a custodial account is permitted. What happened to the HBAR afterwards is not visible on the ledger.
ESF's reports also list "Ecosystem Support – Account 800: $1,036,345" (cumulative, unchanged through 2025). If that refers to 0.0.800, the network's staking-reward account, the foundation paid about $1 million into the pool that funds other holders' rewards. The reports do not explain the line, and the payment cannot be isolated on the ledger because 0.0.800 is credited on every transaction.
The two positions
Hedera's (Complaint, Doc 1): ESF reported one consolidated treasury for the life of the grant, then a Cayman-only balance sheet after termination (see timeline); Hedera puts the share moved to affiliates at 98%. It alleges the October 2025 transfers were meant to make ESF Cayman "judgment proof", says unspent funds must be returned on termination, and seeks tens of millions of dollars in damages, an accounting and an injunction.
Exponential Science's (Docs 24, 34): Hedera terminated "without cause"; only "Uncommitted Grant Funds", meaning funds neither spent nor committed, must be returned, and Hedera has not pleaded that any exist; the Second Amendment, which Hedera signed, authorized the transfers "without restriction or dollar limit"; and they predated the termination notice by four months. ESF says it is a non-profit with no beneficial owners, that Hedera held observer seats on its board, and that its investment-based Evergreen Funding Model was "recommended by the Hedera Council and Board". Its Q4 2025 report lists commitments "of up to ≅49M$ for treasury management".
Paolo Tasca, Executive Chairman of ESF Cayman and President of ESF Switzerland, is named in the complaint but is not a defendant.
Case 2: The Hashgraph Association
Timeline
| Date | Event | Source |
|---|---|---|
| Jan 29, 2022 | First grant agreement ("Phase A-1") between Hedera and THA, a Swiss association formed on Kamal Youssefi's proposal. Hedera publicly earmarks $16.3M in HBAR for the Hashgraph Innovation Program that April. | Complaint ¶¶25–26; Hedera press release, Apr 20, 2022 |
| Mar 1, 2023 | Second grant agreement ("Phase A-2"): an innovation program, a certification program and an enterprise accelerator. Funds may be used only for those programs; no transfers to related parties without Hedera's written consent; unspent funds returned on termination. | Complaint ¶3 |
| Sep 2, 2024 | Third Amendment opens "Phase B" and adds The Hashgraph Group AG (THG), co-owned by Youssefi and Deiss, as service provider and party, acting as THA's fiduciary. Schedule C-2 describes Hashgraph Ventures Fund I as a $100M fund with "THA as initial anchor investor contributing USD 20m"; the plan allots $10M in 2024 and $10M in 2025. THA is to use reasonable efforts to add independent directors by Aug 31, 2025. | Complaint ¶¶41–48 |
| Jun 17, 2025 | Youssefi and Deiss are advised, Hedera says, that THA's transfers to the fund are grant funds that cannot be sent there. | Complaint ¶59 |
| Mar 2025 – Mar 2026 | THA's reported total assets fall by more than $60M. | Complaint ¶58 |
| Jul 31, 2026 | Hedera terminates the grant agreement for alleged material breach, by phone and letter, and demands the return of unspent HBAR within seven days. | Complaint ¶¶60–61 |
| Aug 6, 2026 | THA rejects the termination and declines to return funds, citing wind-down obligations and other commitments. | Complaint ¶62 |
| Oct 4, 2026 | Hedera files suit in New York, naming the two principals personally. | Complaint |
| Oct 9, 2026 | THA and THG say they are reviewing the claims with counsel, will respond through legal channels, and "continue to operate without interruption." | THA statement |
What Hedera alleges
Youssefi is President of THA and Chairman and co-owner of THG; Deiss is a THA director and THG's Managing Director and co-owner. Hedera alleges that they also control the fund, its general partner, its carry vehicle, its Abu Dhabi-licensed manager and both of its only two limited partners; that they caused THA to commit $50 million of grant funds to it, and THG $2 million or more, without consent and $30 million above the disclosed $20 million; that they gave themselves 30% of the carry; that Schedule C-2 presented the fund as independent; and that, when questioned, they admitted the $50 million commitment but refused to reverse it. Of nine counts, fraudulent inducement is pleaded against THA, THG and both men; voidable transfers against THA, THG and the fund; conversion and money had and received against the two men. Hedera seeks damages, an accounting, avoidance of the transfers, a constructive trust including any carry, and fees.
The $20 million anchor commitment was disclosed in the 2024 amendment and announced publicly in December 2024 (Middle East AI News, Dec 18, 2024). What Hedera says it did not know is who owned the fund's manager and carry, and that the commitment grew to $50 million. The complaint does not state how much HBAR Hedera granted THA.
THA's position
No defence has been filed. Hedera says THA's August 6 letter relied on wind-down obligations and other commitments; THA and THG's October 9 statement says they will respond through legal channels and does not address the fund.
On the ledger
The complaint names no Hedera account, so the match below is ours, and we rate it medium confidence. On March 11, 2022, six weeks after the first THA agreement, the treasury paid 72.4 million HBAR in four equal payments to 0.0.727290, an account opened that February. That is exactly $16.3 million at $0.225, about where HBAR traded in the first days of March 2022 (around $0.21 on the day itself), and $16.3 million is the sum Hedera announced for THA's program the following month. The same account received 248 million HBAR on March 31, 2023, a month after the second agreement, and 413 million more in June and August 2023. A second account, 0.0.3239138, which 0.0.727290 had funded, received 814.5 million HBAR on September 7, 2024, five days after the Third Amendment, and 382.5 million on November 21, 2024. That is about 1.93 billion HBAR in all. Most of it has since moved on; the two accounts now hold about 24 million HBAR. We have not traced where the rest went, and nothing here shows how it was used.
What the two cases have in common
Both grantees came through Hedera requests for proposals and were named in the January 2024 allocation. Both founders had sat at the Council table: Youssefi represented Swisscom on the Council before founding THA (Hedera, April 20, 2022), and Tasca attended Council meetings for University College London, a Council member (Council minutes, 2021–2023). Each agreement was later amended in ways now at the centre of the dispute: ESF's in 2025 to permit unlimited transfers among listed affiliates and subsidiaries, THA's in 2024 to add the founders' company and disclose a $20 million fund investment. ESF says its amendment authorized what it did; THA has not yet filed a defence. As recently as June 2025, Council minutes record THA "making good progress" against its grant KPIs and ESF reporting targets "achieved". ESF's reported HBAR fell from 568 million to 336 million during 2025; THA's total assets fell by more than $60 million in the year to March 2026. The terminations differ: without cause for ESF, for alleged material breach for THA.
The grantee not sued
The HBAR Foundation received the first and largest grants. The Council approved its allocation on July 14, 2021, earmarking up to 5.35 billion HBAR "based on the strength of their RFP proposal", with Hedera to hold a non-voting seat on the foundation's board and grant committee (Council minutes); Hedera announced it on September 16, 2021 (Hedera). On November 22, 2024 the Council allocated up to 7.07 billion HBAR more to the renamed Hedera Foundation; under a grant amendment signed January 28, 2025 it paid 3.5 billion on February 14, 2025. Council minutes say the new agreement added "additional reporting requirements, corporate governance provisions, and market integrity requirements" (June 2025). Later tranches had depended on the foundation taking over Hashgraph's services agreement for network development, a step the parties were still evaluating. On October 29, 2025 the Council cut the allocation to the 3.5 billion already paid, declared the grant "fully satisfied and concluded", and moved the remaining 3.57 billion to an ecosystem and open-source development fund run by its Board, citing flexibility and "the optimal home for network development activities" (Council minutes, October 29, 2025). In January 2026 the foundation narrowed its role to supporting existing grantees and handed core business and ecosystem development to Hashgraph, saying current grants would be honoured (DailyCoin, January 7, 2026). The Canary HBAR ETF registration statement names the HBAR Foundation as the fund's seed investor (Form S-1/A). On the ledger, nearly 11 billion HBAR has gone from Hedera's treasury since 2021 to accounts that appear to be the foundation's, and about 2.4 billion (roughly $186 million at $0.077) is still in them. The Council's FAQ says the foundation must publish annual reports on its grant giving; if one has been published, we have not found it, and no public accounting we have seen reconciles the HBAR received with grants paid. The account match is ours: on February 14, 2025 the treasury paid exactly 3.5 billion HBAR, in 20 payments of 175 million, to 20 accounts opened in late 2021, matching the tranche the minutes and the ETF filing describe. The foundation has not been sued.
Once a tranche leaves the treasury, the ledger shows only where it first lands, here apparently an exchange's pooled wallet. From then on Hedera, and anyone reading the ledger, relies on the grantee's reports. That is normal for ecosystem grants on any network, and it is why our sustainability work treats released supply as a ceiling on spending, not the amount spent.
What we could not verify
- Who controls the receiving accounts. The ESF payment forms are blank in the exhibits and the THA complaint names no accounts, so every account match in this note is ours, made by amount and date.
- What happened to the second tranche after it reached the exchange accounts, or whether the October 2025 transfers moved HBAR, stablecoins or fiat.
- The total Hedera granted to THA in dollars (our ledger estimate is in HBAR only), and how much of the $50 million commitment to the fund was actually paid.
- The merits. Both complaints are allegations; ESF's motions are argument; THA has not yet answered. No court has ruled on the merits or on the motions to dismiss.
Sources
New York Supreme Court, New York County. Index 652870/2026 (Hedera v. Exponential Science): Complaint (NYSCEF Doc 1, May 15, 2026); Memoranda of Law for the motions to dismiss (Docs 24, 34); exhibits to the Rodman affirmation: Grant Agreement (Doc 26); First Amendment (Doc 27); Second Amendment (Doc 28); ESF Q4 2024 report (Doc 29); ESF Q4 2025 report (Doc 30), all filed October 6, 2026. Index 655628/2026 (Hedera v. The Hashgraph Association et al.): Complaint (Doc 1, October 4, 2026). The Hashgraph Association and The Hashgraph Group, statement on legal proceedings, October 9, 2026. Hedera press releases of September 16, 2021, April 20, 2022, January 12, 2024 and May 8, 2025; Hedera Council minutes of July 14, 2021, December 2021–September 2022, August 2023, May and November 2024, and June, October and November 2025; Canary HBAR ETF Form S-1/A, October 2025; Hedera Council FAQ; DailyCoin, January 7, 2026; Middle East AI News, December 18, 2024. Hedera mainnet ledger via Hgraph and HashScan, transactions linked above; exchange attribution from HashPack's exchange deposit address list; account 0.0.652978 checked October 24, 2026. Hedera Council treasury management report (October 6, 2026), for ecosystem development releases. HBAR prices from CoinGecko and Twelve Data. The author holds no HBAR.