Cypher Exchange Developer Admits to Misappropriating $300K

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In a shocking turn of events, a software developer behind the Solana-based decentralized exchange Cypher, known as Hoak, confessed to using over $300,000, originally raised to reimburse customers after a million-dollar hack, for gambling.

Hoak’s admission, made public through a document titled “Public Statement” posted on X (formerly Twitter), has dealt a severe blow to Cypher, which had been striving for a comeback since the hack in August 2023.

Cypher Developer Admits Guilt

Despite the setback, Cypher had shown promise, experiencing rapid growth last summer with the introduction of a points program, indicating plans for an airdrop. At its peak, users had deposited over $1.5 million worth of crypto into the exchange. 

However, on August 7, a hacker exploited a bug in the protocol’s code, resulting in the loss of more than $1 million in crypto.

“I let too many things pile up in my head for too long, I let them consume me, and ultimately they took the best of me—I completely lost it late last year and earlier this year, to the point where simply trying to hold it together was impacting everything else in my life, distancing myself from long time friends, family, not being able to meet the deadlines I set for myself, having erratic behaviours, you name it,” said Hoak.

Cypher Remains Frozen

Since then, Cypher has remained frozen, with developers working to raise funds for a security audit and to relaunch the exchange. However, recent accusations have surfaced against Hoak, alleging that he misappropriated funds intended to reimburse customers affected by the hack.

One of the exchange’s pseudonymous developers expressed deep disappointment, stating that they never expected a core contributor, who remained after the exploit to rebuild the project, to engage in such actions. They have contacted law enforcement regarding the matter.

Hoak Issues Apology

In his statement, Hoak issued an apology, attributing his actions to a “crippling gambling addiction” and other unchecked psychological factors. He denied involvement in the initial hack and expressed his willingness to cooperate with law enforcement.

Despite suspicions, Cobra, a key figure in the crypto community, indicated that Hoak was unlikely to be the hacker responsible for the original theft of $1 million. This assertion was supported by blockchain analysis conducted by law enforcement and renowned crypto sleuth ZachXBT.

Treatment for Gambling Addiction

Hoak has vowed to seek treatment for his gambling addiction and has committed to facing the consequences of his actions. He emphasized the need to reset his life and expressed remorse for the damage caused.

The incident serves as a cautionary tale, highlighting the risks associated with the crypto industry and the importance of transparency and accountability in decentralized exchanges.

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