SOLANA’S CYPHER DEV ADMITS LOSING $300K IN GAMBLING 

A developer for the Solana-based Cypher Protocol, known by the pseudonym Hoak, has admitted to misappropriating nearly $300,000 of user funds and subsequently losing them through gambling.

In a statement released on May 14 on X, Hoak acknowledged the truth of the allegations against him, stating, “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 confession came a day after another core contributor, Cobra, disclosed the missing funds.

Cobra detailed that the misappropriation occurred over several months through 36 withdrawals. He explained how the funds were moved: “Deployer wallet (ETR8…) withdraws funds from Cypher’s redemption contract. Then conducts swaps and sends SOL, USDC, and USDT to an intermediary wallet (7sKM…). This intermediary wallet then sends funds to Binance.”

On-chain data provided by Cobra revealed that a total of $317,000 in Solana, Tether, and USD Coin was transferred from Hoak’s address to the Binance exchange.

At its height, Hoak’s wallet contained $68,365 worth of digital assets on December 7, 2023, before being significantly emptied by transfers to Binance. By April 22, the wallet still held over $56,000 but was nearly depleted over the next two days, according to data from CoinStats.

This incident marks another setback for Cypher Protocol, which had previously been compromised in August 2023 when it suffered a hack that led to a loss of over $1 million in digital assets.

In his admission, Hoak did not seek sympathy, attributing his actions to a severe gambling addiction and other unchecked psychological issues: “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 incident highlights ongoing concerns about gambling behaviors within the crypto community. Criticism of the industry’s casino-like dynamics is prevalent, with figures such as Gary Gensler, Chair of the United States Securities and Exchange Commission, likening the crypto ecosystem to “casinos in the Wild West,” where stablecoins function akin to “poker chips.”

A 2023 YouGov survey involving over 4,200 adults in the United Kingdom found that individuals engaged in “harmful levels” of gambling were nearly five times more likely to own cryptocurrencies than the general population, posing greater risks from crypto trading.

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