Cypher Protocol Developer Admits To Misappropriating $300,000 For Gambling
Summary:
Hoak, a pseudonymous developer for Cypher Protocol, has publicly admitted to misappropriating nearly $300,000 of user funds for gambling. The confession came after a core contributor, Barrett_io, highlighted the missing funds. Hoak's actions have added to the problems faced by Cypher Protocol, which suffered a hacking incident in 2023 resulting in a loss of over $1 million in digital assets. Hoak attributes his actions to an unchecked severe gambling addiction and unaddressed psychological issues.
Hoak, a developer for the Cypher Protocol under pseudonym, has publicly admitted to unlawfully taking nearly $300,000 of user funds, which he then squandered in gambling. The admission was made in a statement shared to the public on the 14th of May during an X post, where Hoak confirmed the allegations to be accurate, and that he, not anyone else, was to blame for this misadventure.
The confession came a day after Barrett_io, an anonymous leading contributor, brought attention to the missing funds in a post on May 13th. This issue was largely overlooked until an unidentified Discord group user highlighted complications they were experiencing when trying to withdraw funds. As Barrett asserts, "Hoak has relieved the cypher redemption contract of funds over multiple months through 36 withdrawals. The deployer wallet (labelled ETR8) extracts funds from Cypher's redemption contract, conducts swaps, and then sends SOL, USDC, and USDT to an intermediary wallet (labelled 7sKM). This intermediary wallet then moves funds to Binance."
Per Barrett's on-chain data analysis, the address associated with Hoak forwarded a total of $317,000 worth of Solana (SOL), Tether USD (USDT), and USD Coin (USDC) to Binance exchange. On December 7th, Hoak’s wallet had accumulated $68,365 of digital assets before transferring these to Binance. By the 22nd of April, the wallet retained over $56,000 worth of assets before the majority of it was moved over the following two days, CoinStats data indicates.
The actions of the rogue insider have dealt another major setback to Cypher Protocol, already struggling to find its footing after being hacked and losing over $1 million worth of digital assets in August 2023. Hoak attributed his regrettable actions to a severe gambling addiction, saying, "I am not trying to play the victim here, but this episode is the result of a severe gambling addiction likely compounded by a number of overlooked psychological issues."
Skeptics of cryptocurrency have pointed to rampant, casino-style conduct as a significant problem for the sector. Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission, colloquially termed the crypto sphere as 'wild west casinos,' with stablecoins functioning as the equivalent of 'poker chips'. A YouGov survey from 2023 suggested that people gaming at 'damaging levels' were about five times more likely to be crypto owners than average adults, putting them at a higher risk from crypto trading.
Published At
5/15/2024 11:42:34 AM
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