Hawke, developer of the pseudonymous Cypher protocol, admitted to stealing nearly 300

Hawk, the developer of the pseudonymous Cypher protocol, admitted to stealing and gambling with nearly $300,000 of user funds.

The core developer of the Solana-based cross-margin decentralized exchange (DEX) admitted its mistake in a public statement shared on May 14. attack:

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

Hawke’s confession comes after the primary contributor with the pseudonym Barrett_io revealed the previous day about the absence of funds in attack On May 13th.

No one noticed this post until an unknown member of the Discord group highlighted the issues with withdrawing funds. According to Barrett:

“Hawkeye stole funds from the crypto recovery contract. This happened over the course of months with 36 withdrawals… The Deployer Wallet (ETR8…) withdraws funds from Cypher’s recovery contract. Then it performs swap operations and sends SOL, USDC and USDT to an intermediary wallet (7sKM…). This intermediate wallet then sends the funds to Binance.

A total of $317,000 worth of Solana (SOL), Tether USD (USDT), and USDC (USDC) were sent via the address linked to the Hoak to Binance exchange, according to on-chain data compiled by Barrett.

Summary of stolen funds. source: Barrett_io

At its peak, Hoak’s wallet held a total of $68,365 in digital assets on December 7 before sending the funds to Binance. CoinStats data showed that the wallet held over $56,000 in digital assets on April 22 before more than 99% of the assets were transferred in the following two days.

Wallet “7sKM” related to Hoak. Source: CoinStats

The insiders’ actions have dealt another heavy blow to the Cypher Protocol, which has been trying to make a comeback. In August 2023, a DEX was hacked for over $1 million worth of digital assets.

Related: Regulators are cracking down on financial privacy, but ZK Proofs could help

Is gambling addiction a growing problem in the cryptocurrency space?

While Hawke said he expected no understanding for his actions, he blamed his rampant gambling addiction for the thefts:

“I am also in no way trying to victimize myself, but this is the culmination of what has escalated into a crippling gambling addiction and possibly many other psychological factors that have gone unchecked for too long.”

Cryptocurrency skeptics often criticize the industry for being driven by casino-like behavior. US Securities and Exchange Commission (SEC) Chairman Gary Gensler has likened the cryptocurrency ecosystem to “casinos in the Wild West,” where stablecoins act as “poker chips.”

According to a 2023 YouGov poll of over 4,200 UK adults, people who gambled at “harmful levels” were almost five times more likely to own cryptocurrencies than the general population, making them more likely to be negatively affected by crypto trading.

Crypto Survey 2023. Source: Gamcare/YouGov

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