Last month, the decentralized gambling platform ZKasino, which was suspected of scamming and allegedly running away with over 10,500 ETH (worth over $40 million), finally responded late last night by announcing a 1:1 refund of ETH. However, users were given only a short 72-hour window to apply for a refund and were required to return the received $ZKAS bridge rewards, sparking controversy once again.
Background:
ZKasino, a cryptocurrency gambling platform, was accused of a rug pull scam and was suspected of defrauding over 10,000 people, accumulating nearly $32 million in ETH.
The platform faced accusations of being a rug pull scam, with suspicions of running away with over 10,500 ETH (worth over $40 million) from its users. Yesterday, on the 29th, ZKasino promised to refund ETH at a 1:1 ratio, but investors were given only 72 hours to apply for a refund, leading to criticism from the community.
In March of this year, ZKasino launched a reward program that allowed users to bridge their ETH and earn the platform’s native token $ZKAS. Over 10,000 people participated in the program, contributing over 10,500 ETH (valued at approximately $32 million during the outbreak of public opinion). However, in late April, the platform became embroiled in a rug pull controversy and faced severe backlash:
On April 18th, it was discovered that ZKasino had removed the sentence “Ethereum will be returned and can be bridged back” from its bridge website called Bridge funds. Additionally, the official Telegram channel was set to mute, raising doubts among the community about whether the project had run away with the funds.
On April 21st, blockchain analyst Yu Yan monitored the project and found that all the ETH deposited by users into ZKasino had been transferred to a multi-signature address and then deposited into Lido for staking rewards.
On April 21st, ZKasino also modified the website description, forcibly converting the users’ deposited ETH into the platform’s native token $ZKAS.
On May 3rd, the Fiscal Information and Investigation Service (FIOD) of the Netherlands announced the arrest of a male suspect in the “ZKasino fraud case” and seized assets worth 11.4 million euros ($12.2 million), including real estate, luxury cars, and various cryptocurrencies.
On May 10th, ZKasino founder Derivative Monke publicly denied the allegations of scamming, stating, “We strongly oppose the claims made by FIOD and Binance about ZKasino implementing an exit scam or rug pull.”
Limited 72-hour period to apply for ETH refunds
Finally, last night, ZKasino announced on its official blog that they have started a two-step process for users to bridge back their ETH within a 72-hour period. This allows users who choose not to participate in the $ZKAS conversion to retrieve their ETH. However, these users have only three days to apply for a refund, from May 28th, 14:00 (UTC) to May 31st, 14:00 (UTC), and they need to bridge back the first batch of $ZKAS bridge rewards received from ZKasino to qualify for a refund.
According to the official instructions, the refund process is as follows:
Within 72 hours, users must register and apply for the bridge: They must use the original ETH bridge deposit address where they received the $ZKAS bridge rewards and deposit the $ZKAS back into the smart contract controlled by ZKasino. However, it is emphasized that refund applicants will lose any allocated $ZKAS rewards, including the remaining 14 months of linearly released $ZKAS.
The official will take several days to collect data and share with the public which addresses can claim back ETH for verification purposes.
ZKasino claims to have not given up on the project but does not mention how the staking rewards from Lido will be handled.
Furthermore, ZKasino also claims in the announcement that the team has not given up on the project and is still working hard for its success. “We assure everyone once again that we will continue to do our best.”
However, the sudden change in ZKasino’s attitude, from initially refusing to refund ETH to now offering a 72-hour refund registration page, combined with the lack of clarification from Dutch authorities, has led to doubts about the legality of the registration page for the refund. Users are also concerned about the possibility of their wallets being hacked or falling victim to another scam.
It is worth noting that this announcement was not shared on ZKasino’s X account but was only updated on the official website and the X account of ZKasino founder Derivatives Monke, raising suspicions that many affected users may not receive timely information about the refund application.
Additionally, the announcement does not mention how ZKasino will handle the ETH staking rewards obtained from users’ deposits to Lido. DL News pointed out that, based on the current staking yield of 3.3% for Lido, combined with Ethereum’s recent surge, the value of staking rewards earned by ZKasino exceeds $100,000.
[Image: Screenshot of the announcement]
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