Hoak, the developer of the pseudonymous Cypher Protocol, confessed to stealing and gambling nearly $300,000 worth of user funds.
A key developer of the Solana-based cross-margin decentralized exchange (DEX) acknowledged his wrongdoing in a public statement on May 14. post:
“To address the elephant in the room: The allegations are true. They stole the funds and squandered them through gambling. I didn’t get away with it and no one else did.”
Hawk’s confession is as follows. post On May 13, anonymous key contributor Cobra exposed the funding shortfall.
The post went unnoticed until an unknown Discord group member shed light on the fund withdrawal issue. According to Cobra:
“Hoak stole funds from crypto buyback agreements. This occurred over several months over 36 withdrawals. The distributor wallet (ETR8…) withdraws funds from Cypher’s repurchase agreement. Then perform a swap and send SOL, USDC and USDT to your brokerage wallet (7sKM…). This intermediary wallet then sends the funds to Binance.”
According to on-chain data compiled by Cobra, a total of $317,000 in Solana (SOL), Tether (USDT), and USD Coin (USDC) were transferred to the Binance exchange through addresses linked to Hoak.
At its peak, Hoak’s wallet held a total of $68,365 worth of digital assets on December 7, 2023, before the funds were transferred to Binance. The wallet held $56,000 worth of digital assets on April 22, with more than 99% of the assets transferred within the next two days, according to CoinStats data.
The insider’s actions dealt another major blow to Cipher Protocol, which was trying to make a comeback. In August 2023, a DEX was hacked, resulting in the loss of over $1 million in digital assets.
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Is gambling addiction becoming a growing problem in the cryptocurrency industry?
Hoak blamed his rampant gambling addiction for the theft, saying he did not expect any understanding of his actions.
“I am also in no way, shape or form trying to victimize myself but this is the culmination of what has snowballed into a serious gambling addiction and probably a number of other psychological factors that have gone unchecked for far too long.”
Cryptocurrency skeptics have often criticized the industry for driving casino-like behavior. Gary Gensler, Chairman of the U.S. Securities and Exchange Commission, famously compared the cryptocurrency ecosystem to the “Casino of the Wild West” and stablecoins to “poker chips.”
According to a 2023 YouGov survey of more than 4,200 UK adults, people who gamble at “toxic levels” are almost five times more likely to own cryptocurrency than the general public, putting them at risk of negative impacts from cryptocurrency trading. You are more likely to receive it.
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