Cypher Protocol Developer Confesses to $300K Theft Amid Gambling Addiction

NAIROBI (Coinchapter.com) – Hoak, the pseudonymous developer behind Solana-based decentralized exchange (DEX) Cypher Protocol, has confessed to stealing over $300,000 worth of user funds and subsequently gambling them away. The admission, made via a public statement on social media platform X on May 14, has sent ripples of shock and disappointment through the crypto community.

The decentralized exchange (DEX) platform, which offers margined spot and derivatives trading, had been working to recover from a previous $1 million hack in August 2023.

Hoak’s Confession and Apology

According to the Cypher Protocol developer’s public statement on Twitter, the allegations against him are true. He acknowledged taking the funds and gambling them away over several months. The theft involved 36 withdrawals from Cypher’s redemption contract, totaling $314,674 in USDT, USDC, and Solana (SOL). The stolen funds were sent to intermediary wallets before being transferred to Binance.

Hoak expressed remorse for his actions, apologizing to all affected parties. He attributed his behavior to a “crippling gambling addiction” and other unchecked psychological factors. The developer claimed that the situation snowballed from an unexplained event at the first Solana Breakpoint conference in November 2021.

A Devastating Blow to Cypher Protocol

The revelation of Hoak’s theft has dealt another significant blow to Cypher Protocol. The project, which offers access to margined spot and derivatives markets, as well as borrowing and lending services, had become a close-knit team. Barrett described them as “family” and expressed disbelief at Hoak’s actions.

Barrett contacted law enforcement, providing detailed information about the theft. Well-known crypto sleuth ZachXBT also took notice of the incident. ZachXBT claimed to have Hoak’s personal information from their 2023 Cypher Protocol collaboration.

Cypher Protocol is working to recover from this setback. The Solana community now grapples with trust issues raised by Hoak’s actions. This incident reminds the DeFi ecosystem of the importance of robust security measures and accountability.