Coinspeaker
Cypher Protocol Developer Confesses to Gambling $300K of User Funds
Hoak, the pseudonymous developer of Cypher Protocol has confessed that he stole more than $300,000 of user funds, and used it for gambling purposes. Cypher Protocol is a popular Solana-based cross-margin decentralized exchange (DEX) offering access to margined spot and derivatives market along with lending and borrowing services.
Hoak has confessed to the wrongdoing in a public statement on social media platform X, on Tuesday, May 14. “I know likely nothing I say or do will make things better – perhaps other than rotting in jail,” the pseudonymous developer wrote. “To address the elephant in the room, the allegations are true, I took the funds and gambled them away. I didn’t run away with it, nor did anyone else.”
Hoak’s admission comes after Barrett_io, a core contributor using a pseudonym, revealed on May 13th that there were no funds available. This disclosure went unnoticed until an unidentified member of a Discord group raised concerns about encountering difficulties with fund withdrawals. Barrett stated:
“Hoak has stolen funds from the cypher redemption contract. This happened over months via 36 withdraws… Deployer wallet (ETR8…) withdraws funds from Cypher’s redemption contract. Then conducts swaps and sends SOL, USDC, and USDT to an intermediary wallet (7sKM…). This intermediary wallet then sends funds to Binance.”
Moving Funds to Hoak Address on Binance
As per on-chain data compiled by Barrett, Hoak moved a total of $317,000 worth of Solana, USDT, and USDC, to an address associated with him on Binance. As per the data from Coinstats, Hoak’s wallet held a total of $68,365 of cryptocurrencies as of December 7, 2023, before sending the funds to Binance.
Furthermore, the wallet also held $56,000 worth of digital assets as of April 22, before transferring 99% of these assets just within the next two days. The insider’s actions dealt another severe blow to Cypher Protocol, which has been endeavoring to make a comeback. This setback comes after the DEX suffered a major hack in August 2023, resulting in the loss of over $1 million worth of digital assets.
Hoak has confessed that he was addicted to gambling activities. “I am also in no way, shape, or form attempting to victimise myself, but this is the culmination of what snowballed into a crippling gambling addiction and probably multiple other psychological factors that went by unchecked for too long,” he said.
Such incidents give crypto skeptics an upper hand who believe that the industry is plagued with casino-like behavior. In the past, the US SEC Chair Gary Gensler has also compared the crypto ecosystem to “casinos in the Wild West”.
Cypher Protocol Developer Confesses to Gambling $300K of User Funds
