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Highlights
- Hoak admitted to misappropriating and gambling away $260,000 in recovered exploit funds from Cypher Protocol.
- The discovery was made by another contributor, Barrett, who reported the incident to law enforcement.
- Hoak cited severe gambling addiction and mental health issues as the reasons behind his actions.
A contributor to the Solana-based decentralized exchange Cypher known as Hoak via a public statement, confessed to misappropriating and gambling away funds that were recovered following an exploit of the protocol. Another contributor to Cypher, known as Barrett, discovered that Hoak had withdrawn various cryptocurrencies including ETH, WSOL, and BONK across 36 separate transactions from Cypher’s redemption contract.
This contract was set up specifically to allow users to reclaim lost assets from the exploit. The total amount taken by Hoak was approximately $260,000, as calculated by The Block at current cryptocurrency prices. The revelation has shocked the community, especially considering the significant efforts put into recovering and securing these funds post-exploit.
Community Reaction and Hoak’s Confession
Upon uncovering the unauthorized transactions, Barrett immediately reported the matter to law enforcement. In a candid social media post, Hoak admitted to the accusations, stating that the allegations were true and that he had indeed gambled away the recovered funds. He acknowledged that no one else was involved in the misappropriation.
Hoak explained that his actions were driven by deteriorating mental health and a severe gambling addiction that had gone unchecked. He revealed that his mental health issues had been escalating over the past year, causing significant disruptions in his personal and professional life. Hoak’s statement shed light on his struggles, including distancing himself from friends and family, failing to meet deadlines, and exhibiting erratic behaviors.
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Exploit Background and Financial Impact
The initial exploit on Cypher occurred in August 2023, resulting in the loss of 38,530 SOL and 123,184 USDC, with the total value of losses exceeding $1 million according to sources. In response, the Cypher team took swift action, successfully freezing $600,000 worth of the stolen funds on centralized exchanges. To help users recover their lost assets, they created a redemption contract.
Barrett expressed profound disappointment in the aftermath of Hoak’s actions, particularly as Hoak had been a key contributor in the efforts to rebuild the project post-exploit. The breach of trust became evident when a user reported issues withdrawing funds from the redemption contract. Despite Hoak’s assurances that the problem would be resolved, the user continued to face withdrawal issues, leading Barrett to further investigate and uncover the misappropriation.
By understanding the depth of Hoak’s actions, the community’s reaction, and the background of the exploit, we gain a comprehensive view of the challenges faced by Cypher and the significant breach of trust within the team.
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