DeFi Crypto

May 15, 2024

Cypher Protocol developer steals $300,000 from reimbursement fund

Steals Cypher Protocol

A new scandal has arrived in the world of cryptocurrencies. This time, involving the Cypher Protocol, a decentralized project based on the Solana blockchain. One of its main developers, known by the pseudonym “Hoak”, publicly admitted to stealing more than $300,000 from the reimbursement fund intended to compensate users affected by a previous attack. Once again, questions about security and trust in cryptocurrency projects are on the table. 

The confession

That Tuesday, Hoak published a statement on the social media platform X (formerly known as Twitter), confessing to the theft of funds from Cypher Protocol. In his statement titled “My statement on the situation”, he claimed that the accusations are true. His words were: “I took the funds and gambled them away. I didn’t run away with it, nor did anyone else.” Hoak expressed deep remorse for his actions, attributing his behaviour to untreated psychological issues, including severe gambling addiction.

This is the culmination of what snowballed into a crippling gambling addiction and probably multiple other psychological factors that went by unchecked for too long.

Hoak recognized that his actions harmed not only himself, but also colleagues and close friends, undermining trust in the Cypher Protocol. The theft is a devastating blow to the project, which was already struggling to recover from a previous hack that resulted in the loss of a million dollars in August 2023. Having managed to freeze approximately $600,000 of the stolen assets, CYPHER was working to reimburse affected users. However, the revelation of internal theft undermined these efforts. 

Another key Cypher Protocol contributor, known as “Barrett”, discovered that Hoak had made 36 unauthorized withdrawals from the reimbursement fund over several months. Barrett, in a post on X, expressed his sadness and disappointment. “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.”

The consequences

Cypher Protocol confession consequences

The theft was discovered when a user reported that they were unable to withdraw funds from their reimbursement wallet. When asked about the problem, Hoak initially stated that he would “take care of the issue”, but he never fulfilled his promise. Barrett, after checking, provided detailed information to police and collaborated with well-known blockchain investigator “ZachXBT”, who had obtained Hoak’s personal data during the investigation into the August 2023 hack. ZachXBT promised to share this information with authorities as necessary.

Hoak’s gambling addition is an example of how the volatile casino-like nature of cryptocurrency trading can attract individuals like him, with gambling-related mental health issues. A study conducted in the United Kingdom in 2023 revealed that people with gambling concerns are almost five times more likely to own cryptocurrencies compared to the general citizen. In the UK, 0.7% of the adult population were identified as problem players, according to the study. This incident reignites discussion about the need for greater awareness and support for those struggling with gambling addiction within the cryptocurrency community.

The future of the Cypher Protocol

Cypher Protocol Future

The path ahead for Cypher Protocol remains uncertain. The team proposed many preventative measures, including stricter security audits, better internal controls, and reducing the anonymity of cryptocurrency project founders. These measures are important to restore user confidence and prevent future incidents of theft and misuse of funds. Hoak, for his part, has stated his intention to face legal consequences for his actions, acknowledging that he will likely face a prison sentence.

I currently have no energy left whatsoever and considering no one is going to want anything to do with me after all this, I believe there’s no way forward and it’s actually over for me.

This new scandal serves as a reminder of the complexities and risks associated with the world of cryptocurrencies. In 2023, hackers stole a total of 1.1 billion dollars from DeFi protocols. And even though it is a drop of 63.7% compared to the previous year, the numbers are still very high and show the vulnerability of the sector. It highlights the importance of transparency and security in the industry.

In the United Kingdom, it was announced new regulations to strengthen security and consumer protection rules in activities related to crypto assets. In the US, the Biden administration has launched a plan to mitigate the risks associated with cryptocurrencies, including creating a regulatory framework to develop digital assets securely and responsibly.

Karla de Matos

Finance Journalist

Financial journalism, cryptocurrency analysis, multilingual communication strategies, education in international markets

Karla Ruiz de Matos is a multifaceted journalist and writer with a deep specialisation in cryptocurrencies, technology, finance and international markets. Fluent in English, Spanish and Portuguese, Karla has a diverse career that reaches multiple continents and cultures, making her a distinctive voice in financial and technology journalism.


Karla began her academic journey in Brazil, where she studied Accounting through a BTEC at SENAC RJ, developing a solid foundation in finance. She then moved to England, where she obtained a BA (Honours) in Linguistic Studies, with a focus on English and Spanish.

The passion for communication and technology led her to further her knowledge in Europe, where she completed an MSc in Digital Marketing, Communication and Social Media at IMF Business School, with a special emphasis on the European market. Additionally, Karla expanded her expertise in digital marketing by completing a DipHE from the Veiga de Almeida University, focussing on the specific dynamics of the Brazilian and Latin American markets.

Continuing her commitment to constant improvement, Karla is currently studying for a master’s degree in Spanish writing at the prestigious University of Salamanca in Spain. This new academic challenge reflects her desire to further deepen her linguistic and editorial skills, consolidating the ability to create impactful content in multiple languages.

Professional experience

Since 2023, Karla has worked as a writer for crypto news channel, where she produces well-founded, insightful and engaging content about analysing altcoin prices for the US market. Simultaneously, she writes news in Spanish for the Spanish and LATAM markets, and in Portuguese for the Brazilian market, covering topics such as iGaming, finance, crypto, politics and technology.

With more than a decade of writing experience and five years dedicated specifically to financial journalism, Karla has built up a broad experience working for renowned companies, such as GreenTomatoMedia, Finixio, Plastow Media and NSN. She is currently part of the AltSignals team, where her expertise continues to enrich the coverage of complex topics in the world of finance and cryptocurrencies

Publications and accomplishments

Although Karla has published two books in Brazil and one in Portugal, her professional focus is firmly rooted in digital journalism. Her approach is informed by a philosophy of rigorous confirmation of information, ensuring that her reports are always based on reliable and verified sources.
Interests and motivations
Karla is driven by a passion for numbers and words, which led her to explore the intersections between finance and communication. From an early age, her interest in the financial dynamics of different countries shaped her career, focusing on understanding and analysing global financial realities through the lens of cryptocurrencies and technological innovations.

Vision for the future

Looking to the future, Karla aspires to consolidate her position as a leading financial journalist, recognised for the credibility and actuality of her journalistic reports and articles. Her aim is to be the primary source for anyone seeking to understand the latest trends and developments in the world of cryptocurrencies and finance, always providing context and detailed analysis.

Latest posts author Karla de Matos

Latest posts from the category DeFi Crypto