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Exit Scam or Gamble? Cypher Founder Admits to Gambling Loss

cypher protocol

Hoak, the pseudonymous creator of Cypher Protocol, has admitted to taking about $300,000 in user money and gambling it away.

The main architect of the cross-margin decentralized exchange (DEX) based in Solana acknowledged his misconduct in a public declaration published in a May 14 X post:

“To address the elephant in the room, the allegations are true; I took the funds and gambled them away. I didn’t run away with it, nor did anyone else.”

Hoak’s admission follows the disclosure of the lack of cash made the day before in a post on May 13th by the anonymous core contributor Barrett_io.

The post went ignored until a member of an unidentified Discord group mentioned having trouble withdrawing funds. Barrett says as much:

“Hoak has stolen funds from the Cypher redemption contract. This happened over months via 36 withdrawals. Deployer wallet (ETR8) withdraws funds from Cypher’s redemption contract. Then it conducts swaps and sends SOL, USDC, and USDT to an intermediary wallet (7sKM…). This intermediary wallet then sends funds to Binance.”

Barrett compiled on-chain evidence showing that the address linked to Hoak sent $317,000 worth of Solana, Tether USD, and USDC to the Binance exchange.

 

An overview of the stolen funds. Source: Barrett_io

 

On December 7, before the monies were transferred to Binance, Hoak’s wallet had a total of $68,365 worth of digital assets. On April 22, the wallet had about $56,000 worth of digital assets; CoinStats data indicates that over 99% of the assets were moved over the following two days.

Wallet ”7sKM'”associated to Hoak. Source: CoinStats

 

With these acts, the insider dealt Cypher Protocol, which has been attempting to make a return, yet another serious setback. The DEX had digital assets valued at more than $1 million stolen in August 2023.

Many times, skeptics of cryptocurrency have accused the sector of being motivated by casino-like conduct. Stablecoins serve as the “poker chips” in the crypto ecosystem, which U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has infamously compared to “casinos in the Wild West.”

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