It went undetected for months even though the insider scheme executed over thirty-six transactions, resulting in the theft of $300,000 from the Cypher Protocol, as the main developer’s misconduct on Solana led to funds being spent on gambling.
Hoak, a pseudonymous inventor of the Cypher Protocol, admitted stealing about $300,000 in user funds. He then spent stolen money on gambling.
The main developer of the cross-margin decentralized exchange located in Solana confessed his misconduct in a statement released to the public on X post on May 14:
“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 came after the anonymous core contributor Cobra posted on May 13th, exposing the lack of funding.
The post went ignored until an anonymous Discord group member mentioned having trouble withdrawing funds.
As stated by Cobra:
“Hoak has stolen funds from the cypher redemption contract. This happened over months via 36 withdrawals… 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.”
According to Cobra’s on-chain data, $317,000 in Solana SOL, $145 in Tether USDT, and $1.00 in USD arrived in total. The money came in from the Hoak-related address to the Binance exchange.
Hoak’s wallet peaked on December 7, 2023, with $68,365 worth of digital assets in it. On April 22, the wallet included digital assets valued at over $56,000 before it headed to Binance. Based on CoinStats data, Hoak sent over 99% of the assets in the next two days.
Cypher Protocol suffered another serious setback as a result of the insider’s actions. The procedure has been trying to make a return of things. DEX had a hack in August 2023 resulting in loss of digital assets valued at more than $1 million.
Survey Links Crypto Ownership to Harmful Gambling Behavior
Hoak expressed that he doesn’t expect others to understand his actions. He blamed his compulsive gambling addiction for 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.”
Industry critics who doubt crypto often point fingers at it. They argue that it’s driven by actions like those of a casino. The United States Securities and Exchange Commission Chair Gary Gensler is well known for this criticism. Gensler made a comparison between the cryptocurrency ecosystem and a “ casino in the Wild West.” He proposed the idea that stablecoins are like “poker chips.”
A YouGov survey conducted in 2023 among over 4,200 persons in the UK identified a noteworthy trend. Those who engaged in “harmful levels” of gambling were almost five times more likely to have crypto. This data points to a link between owning crypto and engaging in harmful gambling. People in this group can be more vulnerable to the drawbacks of crypto trading.
