Hoak, a core developer of the Solana-based decentralized exchange Cypher Protocol, has confessed to stealing over $300,000 worth of user funds and gambling them away.
The admission comes as a blow to the project, which has been struggling to recover from a previous hack in August 2023 that saw over $1 million in digital assets stolen.
TLDR
- Hoak, a core developer of Solana-based decentralized exchange Cypher Protocol, admitted to stealing over $300,000 worth of user funds and gambling them away.
- The theft occurred over months via 36 withdrawals from Cypher’s redemption contract, with funds being sent to intermediary wallets and eventually to Binance.
- Hoak blamed his actions on a “crippling gambling addiction” and other unchecked psychological factors, apologizing to all affected parties.
- The theft was first detected when a Discord member reported issues with withdrawing funds, prompting another core contributor, Barrett, to investigate and contact law enforcement.
- The incident deals another significant blow to Cypher Protocol, which was previously hacked for over $1 million in August 2023 and has been attempting a comeback.
According to Hoak’s public statement, released on Twitter, the allegations against him are true.
“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,” he wrote.
The developer expressed remorse for his actions, apologizing to all affected parties and acknowledging that his behavior was inexcusable.
The theft, which occurred over several months, involved 36 withdrawals from Cypher’s redemption contract. As detailed by another core contributor, Barrett, the stolen funds, which included $314,674 in USDT, USDC, and Solana (SOL), were sent to intermediary wallets before being transferred to the Binance exchange.
Hoak’s wallet amassed over $184,077 in various digital assets, including ETH, RLB, ORCA, RAY, USDT, USDC, BONK, JitoSOL, mSOL, and WSOL.
The incident came to light when a member of the Cypher Protocol Discord server reported difficulties in withdrawing funds.
Despite Hoak’s assurances that he would resolve the issue, the user was still unable to withdraw after the provided deadline. This prompted Barrett to investigate the matter further, ultimately uncovering the extent of Hoak’s theft.
cypher contributor Hoak (wallet: 7sKMs4mdqFzFgmcZhMnaZayCFqfDEimAf94A2KKXjrWW) has stolen funds from the cypher redemption contract. This happened over months via 36 withdraws (txs laid out in document).
Summary of movement:
Deployer wallet (ETR8…) withdraws funds from…— cobra ©️ (@barrett_io) May 13, 2024
In his confession, Hoak attributed his actions to a “crippling gambling addiction” and other unchecked psychological factors.
He claimed that the situation snowballed from an unexplained event at the first Solana Breakpoint conference in November 2021, where he and his brother were victims of a similar incident involving a Mango DAO member named Max.
The revelation of Hoak’s theft has sent shockwaves through the Solana community, as Cypher Protocol had been working tirelessly to stage a comeback following the August 2023 hack.
The project, which offers access to margined spot and derivatives markets, as well as borrowing and lending services, had become a close-knit team, with Hoak describing them as “family.”
Barrett expressed his disappointment and disbelief, stating,
“This is incredibly saddening to me. I never thought this would be a possibility, having a core contributor who stayed on after the [Mango] exploit to try and rebuild the project be the one who rugged funds from the redemption contract.”
He has since contacted law enforcement, providing them with detailed information about the theft.
The incident has also caught the attention of well-known crypto sleuth ZachXBT, who claimed to have Hoak’s personal information from a previous collaboration during the 2023 Cypher Protocol exploit. ZachXBT has stated that he will share this information with law enforcement as needed.
