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Cypher Protocol internal developer confesses to stealing $300,000: "Gambling addiction consumed me"

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Cypher Protocol internal developer confesses to stealing $300,000: "Gambling addiction consumed me"

The founder of the DEX Cypher on Solana, Cobra, publicly revealed a document on social media platform X yesterday, accusing the protocol's core developer "Hoak" of embezzling and stealing around 300,000 USD of funds through a user fund redemption contract created during last August's hacking incident. Hoak admitted to the accusations, citing severe gambling addiction as the cause.

Cypher Founder Reveals: Internal Staff Embezzled Funds

The documents released by Cobra show that developer Hoak's wallet has executed a total of 36 withdrawal transactions over the past few months, extracting various cryptocurrencies including ETH, SOL, USDT, and USDC from Cypher's previous redemption contracts.

Cobra statistics

He found that the tokens currently worth approximately $300,000 have mostly been sent to Binance for sale:

I never thought something like this would happen, that a core developer trying to rebuild the project after a hacking incident would be the one embezzling funds from user redemption contracts.

As a long-time partner, Cobra sadly stated that he has reported Hoak's criminal behavior to law enforcement.

Hoak: Gambling Addiction Snowballed Out of Control

In response, Hoak admitted his misconduct in apublic statement andclaimed that no one else was involved.

The statement reads that the accusations on social media are all true, he took funds that belonged to the team or users, gambled them away, and no one else ran away with the money:

I know I must face the consequences, and anything I can say or do seems to be of no use now.

He emphasized that his actions were driven by "severe gambling addiction" and "deteriorating mental health," which exacerbated the situation.

Hoak's statement

Too many things piled up in my mind for too long, even consuming me, ultimately taking away the good in me, and causing my family and friends to leave one by one.

At the same time, Hoak also mentioned his long-standing helplessness, stating that although he found a sense of belonging within Cypher, he lacked the ability to innovate more within this DEX and was stuck in a cycle of work, failure, and the subsequent hacking incidents.

Cypher Hacking Incident Background

As a newcomer to the derivative exchange scene on Solana, Cypher Protocol received a $2.1 million funding in 2021.

However, the protocol was nearly abandoned after being exploited by hackers in August 2023, resulting in the theft of approximately $1.03 million worth of Solana and USDC.

The Cypher team froze a portion of the stolen funds worth $600,000 at the time, and created aredemption contract and compensation plan for users to recover funds and make reparations, which Hoak then embezzled from.