Core Contributor Steals from Cypher Protocol

In a shocking turn of events, Hoak, a pseudonymous core contributor of the Solana-based decentralized exchange Cypher Protocol, has committed a significant theft from a redemption contract designed to recover funds lost in a previous exploit.

The theft was disclosed by another core contributor known as “@barrett_io,” who revealed that Hoak executed 36 withdrawal transactions from the recovery wallet. These transactions included a variety of protocol assets such as ETH, RLB, BONK, ORCA, and wrapped versions of SOL. Hoak subsequently converted these assets into USDT, USDC, and SOL, and transferred them to the cryptocurrency exchange Binance. The total value of the stolen assets was nearly $300,000.

Barrett expressed deep disappointment and shock over the incident, particularly because Hoak had remained with the project to help rebuild it after last year’s exploit. “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,” Barrett stated. He has also reported the incident to law enforcement in hopes of addressing the betrayal.

In a startling confession on the social media platform X, Hoak admitted to the theft, attributing his actions to a severe gambling addiction. “I know likely nothing I say or do will make things better – perhaps other than rotting in jail. To address the elephant in the room, the allegations are true, I took the funds and gambled them away,” he said.

The initial hack of Cypher Protocol occurred in August 2023, resulting in the loss of $1 million due to vulnerabilities in its smart contracts that were exploited to issue bad loans. This led to significant bad debt for the protocol.

The revelation of internal theft by Hoak adds another layer of difficulty to Cypher Protocol’s ongoing efforts to recover and secure its operations. This incident not only highlights the vulnerabilities of decentralized finance platforms to both external and internal threats but also underscores the challenges of maintaining trust within the crypto community. The future of Cypher Protocol now hangs in the balance as it navigates through this crisis and works towards regaining the trust of its users.