Pseudonymous Cypher Protocol developer Hoak has admitted to stealing nearly $300,000 worth of user funds and gambling them away, shaking the Solana-based cross-margin decentralized exchange (DEX) community. 

In a public statement shared on May 14, Hoak confessed, “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.”

This confession followed a revelation by the pseudonymous core contributor Barrett_io on May 13, who noted the absence of funds. The post initially went unnoticed until an unknown Discord group member highlighted issues with fund withdrawals. Barrett explained, “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.”

On-chain data compiled by Barrett revealed that a total of $317,000 worth of Solana (SOL), Tether USD (USDT), and USDC were sent by Hoak’s address to Binance exchange. At its peak on December 7, Hoak’s wallet held $68,365 worth of digital assets before the funds were transferred to Binance. CoinStats data shows that over $56,000 worth of assets remained in the wallet on April 22, but more than 99% of these assets were transferred in the next two days.

This insider theft is another blow to Cypher Protocol, which had already been trying to recover from an August 2023 hack that resulted in over $1 million worth of digital assets being stolen. 

In his statement, Hoak attributed his actions to a severe gambling addiction, saying, “I am also in no way, shape, or form attempting to victimize 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.”

Cryptocurrency skeptics have often criticized the industry for promoting casino-like behavior. U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has famously compared the crypto ecosystem to “casinos in the Wild West,” with stablecoins functioning as the “poker chips.” A 2023 YouGov survey found that individuals gambling at harmful levels were nearly five times more likely to own cryptocurrencies, highlighting the risks associated with crypto trading.

SOURCE: Solana-based Cypher developer confesses to gambling away $300K of user funds