ZKasino Customers Request Refunds Following Transfer of $33M in Bridged Ether to Lido

Key takeaways: Over 10,000 users deposited $33 million in ether to acquire ZKAS, ZKasino’s native token Contrary to initial promises of returning the bridged ether, ZKasino revealed it had converted the funds into ZKAS. Amidst allegations of investor scam, the decentralized gambling network ZKasino finds itself embroiled in controversy, with crypto venture capital firm Big Brain Holdings disavowing any investment in the project. The fallout comes after ZKasino’s announcement of a $26 million Series A round, listing Big Brain and MEXC exchange as investors in a now-deleted post. Big Brain Holdings clarified that it never invested in ZKasino and will not accept the token distribution offer from the project. This revelation has cast doubt on ZKasino’s credibility and raised concerns within the crypto community about the project’s transparency and legitimacy. The funniest part of the Zkasino drama is that the chain they released has no zk tech in it at all (nor does it use EigenDA). It’s an Arbitrum Nitro chain that took 2 minutes to deploy. They put ZERO effort into scamming everyone lmao. — cygaar (@0xCygaar) April 21, 2024 In response to the unfolding events, ZKasino has emphasized its commitment to decentralization, citing the launch of a DAO governance model as a significant step towards achieving greater decentralization. The project team has proposed various use cases for the DAO, including the ability to change game contracts, introduce new games, implement community initiatives, and roll out platform updates. Big Brain Holdings invested into the @zigzagexchange project in 2022, which subsequently resulted in financial losses for us. Some of the previous founders of that project are now part of the @ZKasino_io team, which appears to be fraudulent. We have never invested in ZKasino… — Big Brain Holdings (@BigBrainVC) April 21, 2024 However, recent developments have fueled skepticism among users and investors. Changes made by ZKasino to its initial plan, including converting bridged ETH to ZKAS at a discounted rate and on a vesting schedule, have raised red flags. Users have also noted alterations to the project’s website, with the removal of statements promising the return of ETH. Further exacerbating concerns is an on-chain transfer revealing that ZKasino moved all users’ invested ETH into the staking protocol Lido. According to reports by Cyvers Alerts, the platform utilized users’ funds to generate the $ZKAS token through token farming. Token farming involves minting new tokens as rewards for participating in platform activities like staking or lending. These revelations have prompted scrutiny and calls for transparency from ZKasino. Investors and users are seeking clarity on the project’s financial practices and assurances regarding the safety of their investments. As the crypto community grapples with the aftermath of this controversy, the incident serves as a stark reminder of the importance of due diligence and vigilance in the volatile world of decentralized finance.

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