Hoak, a developer for the Solana-based Cypher Protocol, has publicly admitted to stealing nearly $300,000 in user funds and subsequently gambling them away.
His confession was made through a post on X on May 14, where he stated, “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.”
This admission followed a previous revelation by another core contributor, Cobra, who highlighted the missing funds in a post a day earlier.
Cobra detailed the theft in his post, explaining how Hoak systematically withdrew funds over several months from the cypher redemption contract, converting them into different cryptocurrencies and transferring them to Binance.
The transactions involved multiple steps and intermediary wallets, and totaled $317,000 in Solana, Tether (USDT), and USD Coin. On-chain data traced these movements back to Hoak’s associated addresses.
At the time of the thefts, Hoak’s wallet contained significant amounts of digital assets, which were mostly transferred to Binance within a few days in April.
These actions have further damaged the reputation of the Cypher Protocol, which had already suffered a major hack in August 2023, resulting in the loss of over $1 million in digital assets.
Hoak, addressing the motivations behind his actions, attributed the thefts to a severe gambling addiction and other psychological issues.
He expressed, “I am also in no way, shape, or form attempting to victimize myself, but this is the culmination of what snowballed into a crippling gambling addiction and probably multiple other psychological factors that went by unchecked for too long.”
The case of Hoak raises concerns about the prevalence of gambling behavior within the cryptocurrency industry, often criticized for its casino-like environment.
Gary Gensler, Chair of the United States Securities and Exchange Commission, has likened the crypto ecosystem to “casinos in the Wild West,” calling stablecoins the “poker chips” of the space.
Moreover, a 2023 YouGov survey found a significant correlation between harmful gambling and cryptocurrency ownership, suggesting that those who gamble at risky levels are also more likely to engage in crypto trading, potentially exacerbating their financial vulnerability.
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