Home / News / Crypto / Ethereum / ZKasino Opens 72-Hour Window for ETH Refunds Prompting New Scam Fears
Ethereum
5 min read

ZKasino Opens 72-Hour Window for ETH Refunds Prompting New Scam Fears

Last Updated May 29, 2024 2:04 PM
Teuta Franjkovic
Last Updated May 29, 2024 2:04 PM

Key Takeaways

  • After holding onto millions in user funds for months, ZKasino offered a controversial “bridge back” option.
  • The Medium post about the refund process was not shared on ZKasino’s official X account but by its founder, who is a central figure in the controversy.
  • This move came after accusations of a scam arose due to user outrage over ZKasino’s unauthorized token swap.

ZKasino, a cryptocurrency gambling platform under investigation by Dutch authorities for scam allegations, recently announced  that users could reclaim their ETH at a 1:1 ratio after the funds were effectively frozen for nearly two months.

Just as the platform launched in April, ZKasino unexpectedly altered its token redemption policies. This sudden change prevented investors from retrieving their bridged Ethereum tokens, which the project had originally guaranteed.

Concerns have emerged over ZKasino’s choice of a 72-hour window for its refund process, leading some to question the reasoning and others to fear that the sign-up page could be a scam or wallet drainer.

ZKasino: Refund After Rug Pull Accusations, But With Strings Attached

The blockchain-based gambling project ZKasino stated that it has started a 72-hour “2-step bridge back process” to return funds to investors a month after allegations surfaced of a $33 million “rug pull .”

In a May 28 Medium post , ZKasino outlined that participants could sign up to bridge back their ETH at a 1:1 ratio during this process. The team also conveyed its ongoing commitment to the project, emphasizing its determination to succeed and its continued efforts to deliver on its promises.

Token Forfeit & Unofficial Announcement Raise Red Flags

ZKasino outlined that their refund process requires investors, termed “bridgers,” to return their entire Zkasino (ZKAS) token balance from the original address used for their initial Ether investment. Following this return, a claim portal will be opened after completing a data verification process.

However, ZKasino noted that investors wishing to reclaim their ETH must forfeit any allocated ZKAS tokens and the remaining 14 months of ZKAS release.

Concerns have arisen  about ZKasino’s decision to set a 72-hour window for its refund process, with some questioning the rationale and others worrying that the sign-up page might be part of a wallet drainer or scam.

The Medium post  detailing the refund process has not appeared on ZKasino’s official X account but was posted by a figure known as Derivatives Monke , who is at the center of the controversy.

Rug Pull Debacle: Arrest, Refund Chaos, and Refuted Claims

ZKasino faced significant criticism last month for failing to return investor ETH as promised after its network went live. Instead, it redirected $33 million  in investor and user funds to Lido for staking.

In a previous blog post , ZKasino said that its network had officially gone live. Over 10,000 users who had collectively bridged 10,515 Ether to the network with the expectation of retrieving their ETH as initially promised found themselves facing a stark reality. Instead of returning the bridged ETH, ZKasino declared it had “made changes from our initial plan,” converting all the bridged ETH to its ZKasino (ZKAS) tokens at a “discounted rate of $0.055” with a 15-month vesting schedule.

ZKasino described these changes as being “done as a favor” to “provide a seamless transition,” citing that its chain does not utilize ETH. Users also discovered that the platform had altered the wording on its website, deleting any previous assurances that the bridged ETH “would be returned.” The situation escalated when an on-chain transaction revealed that ZKasino had moved all the user’s 10,515 ETH into the staking protocol Lido, intensifying concerns among its investors.

Subsequently, on April 29, Dutch authorities arrested an individual suspected of being involved in the alleged “rug pull.” Shortly after the arrest, all bridged ETH was returned to the ZKasino multisig wallet. Derivative Monke then publicly refuted  the rug pull allegations on X, expressing regret over the spread of misinformation about the project and strongly denying the claims by the FIOD and Binance that ZKasino was involved in an “exit scam” or “rug pull.”

Was this Article helpful? Yes No