Pseudonymous Cypher Protocol developer Hoak has confessed to stealing nearly $300,000 worth of user funds and gambling them away.

The core developer of the Solana-based cross-margin decentralized exchange (DEX) admitted his wrongdoing in a public statement shared in a May 14 X post:

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 confession follows a post on May 13 by the pseudonymous core contributor Cobra revealing the absence of funds.

The post went unnoticed until an unknown Discord group member shed light on experiencing fund withdrawal issues. According to Cobra:

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.

A total of $317,000 in Solana’s (SOL $144), Tether (USDT $1.00 ) and USD Coin (USDC $1.00) was sent by the address associated with Hoak to the Binance exchange, according to on-chain data compiled by Cobra.

Chart

Summary of stolen funds. Source: Cobra

At its peak, Hoak’s wallet held a total of $68,365 worth of digital assets on Dec. 7, 2023, before the funds were sent to Binance. The wallet held over $56,000 worth of digital assets on April 22 before over 99% of the assets were transferred in the next two days, CoinStats data shows.

Chart

Wallet “7sKM” related to Hoak. Source: CoinStats

The insider’s actions dealt Cypher Protocol another significant blow, which has been trying to stage a comeback. In August 2023, the DEX was hacked, resulting in the loss of over $1 million worth of digital assets.

Is gambling addiction a growing issue in the crypto space?

While Hoak said that he expects no understanding for his actions, he blamed his rampant gambling addiction for the thefts:

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.

Cryptocurrency skeptics have often criticized the industry for being driven by casino-like behavior. United States Securities and Exchange Commission Chair Gary Gensler has famously compared the crypto ecosystem to “casinos in the Wild West,” with stablecoins functioning as the “poker chips.”

According to a 2023 YouGov survey of over 4,200 adults in the United Kingdom, people gambling at “harmful levels” were nearly five times more likely to own cryptocurrencies than the general population, making them more likely to be negatively impacted by crypto trading.

Chart

Crypto Survey 2023. Source: GamCare/YouGov


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin price steady above $65,000 as Hermetica launches BTC-backed USDH on layer 1

Bitcoin price steady above $65,000 as Hermetica launches BTC-backed USDH on layer 1

Bitcoin trades slightly up at the time of writing on Wednesday, rising by 0.14% at $65,158 after closing above the daily resistance level of $64,913 the day before. On-chain data indicates that BTC is undervalued, and US spot Bitcoin ETFs recorded inflows totaling $422.50 million on Tuesday.

More Bitcoin News

Bitcoin rally catalyzes gains in Ethereum, Solana, and XRP, as traders digest Donald Trump incident

Bitcoin rally catalyzes gains in Ethereum, Solana, and XRP, as traders digest Donald Trump incident

Crypto market capitalization increased nearly 4% in the last 24 hours and climbed to $2.522 trillion on Wednesday, as seen on CoinGecko. Almost all cryptocurrencies ranked in the top 10 assets by market capitalization have rallied in that period.

More Cryptocurrencies News

Ontology Gas sets for a rally as technicals show bullish divergences

Ontology Gas sets for a rally as technicals show bullish divergences

Ontology Gas price broke out above a descending parallel channel pattern, indicating a potential bullish momentum ahead. The bullish divergence observed on the RSI and the Awesome Oscillator indicators further suggests a likely reversal and upward trajectory for ONG in the days ahead.

More Cryptocurrencies News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin surpasses $65,000 mark

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin surpasses $65,000 mark

Bitcoin (BTC) closes above the daily resistance level of $64,900, with Ethereum (ETH) and Ripple (XRP) subsequently breaking through their resistance levels, indicating an emerging bullish trend.

More Cryptocurrencies News

Bitcoin: Investors wonder if BTC troubles are behind

Bitcoin: Investors wonder if BTC troubles are behind

Bitcoin (BTC) stabilized around the $57,000 mark this week, while the German Government persists in transferring Bitcoin to exchanges. Concurrently, US spot Bitcoin ETFs have recorded inflows.

Read full analysis

BTC

ETH

XRP