Developer Admits to Gambling Away $300K of Cypher Protocol's Funds

A developer affiliated with the Solana-based Cypher Protocol, known by the pseudonym Hoak, has admitted to gambling away over $300,000 from Cypher's redemption contract.

Hoak publicly confessed to this on May 14 through X.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

How to Invest in Crypto: 6 Rewarding Strategies (Animated)

SUBSCRIBE

ON YOUTUBE

As was disclosed by Barrett_io, another contributor at Cypher, Hoak stole the funds via 36 withdrawals over several months and sent them to an intermediary wallet, which then sent them to Binance.

Further investigations showed that the Binance crypto exchange received approximately $317,000 worth of Tether (USDT), USD Coin (USDC), and Solana (SOL) from addresses linked to Hoak.

Hoak addressed his misconduct by stating:

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.

In his statement, Hoak apologized to all affected parties, also acknowledging the severity of his gambling addiction, which he cited as the reason for his actions:

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.

This breach of trust comes at a difficult time for Cypher Protocol, which is still recovering from a hack in August 2023 that resulted in losses exceeding $1 million.

Bennett_io expressed that the hack adds another layer of surprise and disappointment to the situation, as Hoak was one of the core contributors who helped rebuild the project.

This is incredibly saddening to me. I never thought this would be a possibility, having a core contributor, who stayed on after the exploit to try and rebuild the project, be the one who rugged funds from the redemption contract. 

This situation highlights not only vulnerabilities within the crypto sector but also broader risks associated with gambling.

In other related news, Sonne Finance was also recently exploited for $20 million in crypto through a hack.