Crypto Cypher Developer Gambles $300k of User Money

Crypto cypher developer gambles with user money worth about 300,000 US dollars as he opens up about what was initially a secret until now.

Developer of the pseudonymous Cypher Protocol Hoak has admitted to stealing and wagering away user funds worth nearly $300,000.

The primary developer of the cross-margin decentralized exchange (DEX) based in Solana acknowledged his transgression in a public statement that was published on May 14 by X.

“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 follows a post by the alias core contributor Cobra on May 13 that disclosed the lack of funds.

No one noticed it until an unidentified member of the Discord group disclosed that they were having trouble withdrawing funds. As stated by 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.”

The Binance exchange received a combined amount of $317,000 worth of Solana’s, Ether, and USD coins from the address associated with Hoak, according to Cobra’s compilation of on-chain data.

Hoak’s wallet accommodated the highest value of $68,365 in digital assets on December 7, 2023, before transferring said funds to Binance. According to CoinStats data, the wallet contained more than $56,000 worth of digital assets on April 22. Within the subsequent two days, more than 99 percent of the assets were transferred.

The insider’s actions dealt with Cypher Protocol, which had been attempting to orchestrate a comeback, yet another significant setback. A hacking incident that occurred in August 2023 compromised digital assets valued at more than $1 million.

Is the prevalence of wagering addiction in the cryptocurrency space increasing?

Although Hoak stated that he does not seek any comprehension for his actions, he attributed the burglaries to his severe gambling addiction.

“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.”

Skeptics of cryptocurrencies have frequently asserted that the industry is motivated by casino-like conduct. Gary Gensler, chairman of the United States Securities and Exchange Commission, has renownedly drawn a parallel between the cryptocurrency ecosystem and “wild west casinos,” stating that stablecoins serve as “poker chips.”

A 2023 YouGov survey of more than 4,200 adults in the United Kingdom found that those who engaged in “harmful levels” of wagering were nearly five times more likely than the general population to own cryptocurrencies, making them more susceptible to the adverse effects of crypto trading.