Insider at Solana protocol Cypher admits to taking $300,000: ‘It’s time to face the music’

Insider at Solana protocol Cypher admits to taking $300,000: ‘It’s time to face the music’
A Cypher developer admitted Tuesday to taking money meant for victims of an August 2024 hack. Credit: Andrés Tapia
  • Solana DEX Cypher has been trying to mount a comeback since it was hacked in 2023.
  • A Cypher developer said Tuesday he gambled away funds earmarked for hack victims.

A software developer behind Solana-based decentralised exchange Cypher said he took more than $300,000 that had been raised to help reimburse customers of the exchange after a million-dollar hack.

“To address the elephant in the room, the allegations are true, I took the funds and gambled them away,” the developer, who goes by the pseudonym Hoak, said in a document titled “Public Statement.”

Hoak published the document Tuesday afternoon on X, formerly Twitter.

“I didn’t run away with it, nor did anyone else,” he added.

It’s a devastating blow to a project that had been planning its comeback ever since the August 2023 hack.

Cypher grew rapidly last summer after launching a points program, a sign that its developers were planning an airdrop.

At its peak in August, users had deposited crypto worth more than $1.5 million in the exchange.

On August 7, however, a hacker exploited a bug in the protocol’s code and made off with more than $1 million in crypto.

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Cypher protocol grew rapidly in the summer of 2023.

Cypher has been frozen since, and in recent months, its developers had been trying to raise enough money to pay for a security audit and relaunch the exchange.

On Monday, however, another of the exchange’s pseudonymous developers accused Hoak of stealing money that had been set aside for customers who lost money in the original hack.

“This is incredibly saddening to me. I never thought this would be a possibility, having a core contributor who stayed on after the exploit to try and rebuild the project be the one who rugged funds from the redemption contract,” they wrote, adding that they had contacted law enforcement.

In his mea culpa, Hoak apologised, and blamed his behaviour on a “crippling gambling addiction and probably multiple other psychological factors that went by unchecked for too long.”

Cobra said it was unlikely Hoak was the hacker who stole $1 million in August, citing blockchain analysis from crypto sleuth ZachXBT.

“The on-chain analysis we did corroborated by US law enforcement and other agencies as well as ip tracking all point to different person,” they said.

Hoak has also denied involvement in the initial exploit, and said he would seek treatment for a gambling addiction and would not run from law enforcement.

“It’s time to face the music and reset my life,” he said on Discord.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

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