Hoak, the developer behind the Pseudonymous Cypher Protocol, has admitted to stealing approximately $300,000 worth of user funds and squandering them on gambling activities.
In a public statement shared on May 14, Hoak confessed to his wrongdoing. This confession came after a post on May 13 by Cobra, a pseudonymous core contributor, revealed the absence of funds. The post went unnoticed until a member of an unknown Discord group highlighted issues with fund withdrawals. According to Cobra, on-chain data compiled by them showed that an address associated with Hoak transferred a total of $317,000 in Solana (SOL), Tether (USDT), and USD Coin (USDC) to the Binance exchange.
On December 7, 2023, Hoak’s wallet contained a total of $68,365 worth of digital assets before the funds were sent to Binance. Data from CoinStats shows that the wallet held over $56,000 worth of digital assets on April 22, but over 99% of these assets were transferred in the following two days.
This insider’s actions have dealt a significant blow to the Cypher Protocol, which has been attempting to make a comeback. In August 2023, the DEX was hacked, resulting in the loss of over $1 million worth of digital assets.
Hoak, while acknowledging that he does not expect understanding for his actions, attributed his theft to his severe gambling addiction. Critics of cryptocurrency have often criticized the industry for its resemblance to a casino-like environment. Gary Gensler, the Chair of the United States Securities and Exchange Commission, famously compared the crypto ecosystem to “casinos in the Wild West,” with stablecoins functioning as “poker chips.”
According to a 2023 survey conducted by YouGov, individuals who engage in “harmful levels” of gambling were nearly five times more likely to own cryptocurrencies than the general population, making them more susceptible to negative impacts from crypto trading.
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