Solana-based cypher developer admits to gambling with $300,000 of user funds
Hoke, the developer of the cipher protocol, admitted to stealing and gambling away nearly US$300,000 in user funds.
The main developer of the Solana-based cross-margin decentralized exchange (DEX) admitted the mistake in a public statement shared on a May 14 X post:
“To address the elephants in the room the allegations are true, I took the money and gambled with them. I did not flee with him; I did not run away from anyone else.
Hoke's confession follows a post on May 13 by a fake top contributor, Cobra, about the lack of funds.
The post went unnoticed until an anonymous member of the Discord team pointed out the withdrawal issues. As Cobra says:
“Hook stole the money from the Cypher ransom contract. This happens in 36 months with withdrawal… Deployer Wallet (ETR8…) withdraws funds from cipher redemption contracts. It then performs an exchange and sends SOL, USDC and USDT to an intermediate wallet (7sKM…). This intermediate wallet sends funds to Binance.
According to on-chain data compiled by Cobra, a total of $317,000 in Solana (SOL), Tether (USDT) and USD Coin (USDC) were sent to the Binance exchange at the address linked to the hook.
At its peak, before the funds were sent to Binance, Hawk Wallet held a total of $68,365 worth of digital assets on December 7, 2023. The wallet held more than $56,000 worth of digital assets on April 22 before more than 99% of its assets were transferred, according to CoinStats data.
The insider's actions caused another significant blow to the cipher protocol, which he is trying to recover from. In the year In August 2023, DEX was hacked and more than $1 million worth of digital assets were lost.
Related: Regulators are cracking down on financial privacy, but ZK-proofs can help.
Is gambling addiction a growing issue in the crypto space?
While Hoke said he expected no recognition for his actions, he blamed his rampant gambling addiction for the thefts:
“I am not in any way, shape or form to harm myself, but this is the end of a snowball into a crippling gambling addiction and possibly many other psychological factors that have gone unchecked for too long.
Cryptocurrency skeptics have often criticized the industry for operating in a casino-like manner. US Securities and Exchange Commission Chairman Gary Gensler compared the crypto ecosystem to “casinos in the Wild West” and compared stablecoins to “poker chips”.
According to a 2023 YouGov survey of more than 4,200 adults in the UK, people who gambled at “harmful levels” were almost five times more likely to own cryptocurrencies than the general population, which could have a negative impact on crypto trading.
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