The developer known as Hoak, who is behind the Pseudonymous Cypher Protocol, has admitted to embezzling 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 the pseudonymous core contributor Cobra, who revealed the disappearance of funds. The post went unnoticed until a member of an unknown Discord group highlighted issues with fund withdrawals. Cobra stated that according to on-chain data compiled by them, an amount of $317,000 in Solana (SOL), Tether (USDT), and USD Coin (USDC) was sent from the address associated with Hoak to the Binance exchange.
According to CoinStats data, Hoak’s wallet had a total of $68,365 worth of digital assets on December 7, 2023, before the funds were sent to Binance. On April 22, the wallet held over $56,000 worth of digital assets, but over 99% of these assets were transferred in the following two days.
These actions by an insider have dealt a significant blow to the Cypher Protocol, which has been attempting to make a comeback. The DEX suffered a hack in August 2023, resulting in the loss of over $1 million worth of digital assets.
Hoak, in his statement, acknowledged that he does not expect understanding for his actions but attributed his thefts to his severe gambling addiction. Critics of the cryptocurrency industry often argue that it promotes a casino-like environment. Gary Gensler, the Chair of the United States Securities and Exchange Commission, has famously compared the crypto ecosystem to “casinos in the Wild West,” with stablecoins serving as the “poker chips.”
A 2023 survey conducted by YouGov in the United Kingdom revealed that individuals who engaged 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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