ZKasino Promised Refunds but Instead Staked $33M
The gambling platform rug pull scare is growing and so is the controversy surrounding this recent multi-million-dollar scam
April 22, 2024 09:27 AM
Reading time: 1 minute, 38 seconds
TL;DR Blockchain-based gambling initiative ZKasino faces backlash for transferring $33 million in investor and user funds to staking protocol Lido, diverting from its initial promise to return the funds. The move sparked allegations of an exit scam and provoked outrage among users and investors alike, leading to intense scrutiny and calls for legal action against the project's founders.
In a surprising turn of events, ZKasino, a blockchain-based gambling project, faces severe criticism for handling investor and user funds.
ZKKasino announced that its network had officially gone live, exciting more than 10,000 users who had collectively bridged 10,515 Ether (ETH) in anticipation of collecting the project's native ZKasino (ZKAS) token.
Contrary to expectations, ZKasino disclosed that all bridged ETH was converted to ZKAS at a discounted rate, with a 15-month vesting schedule, deviating significantly from its original promise to return the ETH to its users.
Further adding to the controversy, sources revealed that ZKasino had transferred all the user's ETH to the staking protocol Lido. This action contradicted the project's initial statements and was perceived by many as a betrayal of trust.
The change was so abrupt that users noted the project's website had amended its wording, erasing any commitment to returning the ETH.
The situation worsened when an anonymous crypto developer, known as "cygaar", accused the ZKasino blockchain of being a hastily deployed Arbitrum Nitro chain that lacked the advertised zero-knowledge technology.
This revelation has led hundreds of ZKasino's backers to allege that the project might be an exit scam. Some have even spread personal information about ZKasino's founder, urging legal action.
Adding to the project's woes, venture capital firm Big Brain publicly denounced any association with ZKasino, contradicting the project's previous claims of securing a Series A investment round at a $350 million valuation.
Similarly, crypto exchange MEXC distanced itself from ZKasino's actions, declaring itself a victim of the project's misleading behavior.
"Instead, ZKasino's post said it 'made changes from our initial plan' and all bridged ETH was converted to ZKAS at a 'discounted rate of $0.055' on a 15-month vesting schedule."
As the controversy unfolds, the crypto community watches closely, awaiting responses from ZKasino, its founder, and associated parties.
The incident raises significant questions about accountability and ethical practices within the blockchain industry, especially in projects involving substantial user and investor funds.
