ZKasino, a crypto gambling platform, has sparked significant controversy and allegations of a rug pull following a sudden decision to transfer $33 million worth of investor Ethereum (ETH) to the staking platform Lido instead of facilitating promised refunds. The network, which debuted to over 10,000 hopeful users on April 20, initially attracted investors with the promise of additional $ZKAS tokens and the return on their ETH investments. However, the terms dramatically shifted on launch day, shocking investors and the wider crypto community.
We might have just witnessed the biggest rug in 2024
Investing early in Zkasino cost us over $33M
Official Telegram’s gone, they dumped a massive amount of ETH on Lido, and the founders vanished.
Let’s break down the investigation🧵👇 pic.twitter.com/tYoG4qzQhN
— arndxt (@arndxt_xo) April 22, 2024
The unexpected transfer and change in investment terms prompted a swift backlash from the community. Many investors took to social media platform X to express their frustration, labeling the move as a rug pull—a term used to describe when crypto developers abruptly withdraw funds from a project and leave investors with worthless tokens or no refunds. The situation escalated as some investors began to share personal information about ZKasino’s founder, Derivatives Monke, in an attempt to initiate legal action.
Stakeholder Statements and Denials
Adding to the complexity, venture firm Big Brain Holdings clarified that it had not invested directly in ZKasino, contrary to claims made by the platform. They further distanced themselves by stating they would not accept any pro-rata token distribution offered in earlier discussions.
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
Similarly, MEXC exchange, initially listed as a supporter in the Series A funding, canceled the $ZKAS token listing, citing community concerns, and declared itself a victim of the project’s misleading actions.
Critics and tech analysts have also pointed out discrepancies in ZKasino’s technological claims. The platform, which was touted to utilize sophisticated zero-knowledge proofs and EigenDA for enhanced security and privacy, was revealed by the developer cygaar to be a mere Arbitrum Nitro chain that took minimal effort to deploy, casting further doubts on the project’s legitimacy and intentions.
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. pic.twitter.com/VkKYZWttGl
— cygaar (@0xCygaar) April 21, 2024
The incident has affected those directly involved and cast a shadow over the crypto-gambling sector, which has been striving to build credibility. However, established platforms like Mega Dice continue to attract positive attention, contrasting sharply with ZKasino’s turmoil. The broader crypto market is also watching closely, as such incidents can influence overall investor confidence and regulatory scrutiny in the digital asset space.
The platform’s future remains uncertain as the crypto community and regulatory bodies scrutinize the events surrounding ZKasino. The promised implementation of Ethereum Improvement Proposal (EIP-3074) and continued project development by Derivatives Monke have done little to quell the discontent among investors, who remain vocal in their demand for transparency and the return of their investments.
