Cointelegraph Team
Cointelegraph
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.
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.
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.
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
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.