ZKasino’s Launch Sparks Investor Outrage

ZKasino appeared to be a typical crypto endeavor, boasting a formidable $350 million valuation following its Series A funding, bolstered by a significant $26 million investment from entities including the notable crypto exchange MEXC. Its technological foundation seemed robust, with smart contracts validated by the reputable security firm Certik, an initial review having been undertaken by ChatGPT. The operational status of its testnets added to the project’s credibility.

As launch day approached, enthusiasm surged. Over $33 million in ether was transferred to ZKasino’s network by more than 10,000 participants, each keen on acquiring additional $ZKAS tokens upon the protocol’s debut. The project had pledged that these ether deposits could be reclaimed at the investors’ behest.

However, not all was as it seemed. The cancellation of a major event in Dubai due to a deluge raised the first red flags, followed by more troubling accusations of mismanagement from former colleagues and blockchain analyst ZachXBT. Further allegations surfaced from a representative of ZigZag exchange, accusing ZKasino’s team of embezzling initial project funds from ZigZag’s treasury.

The situation was exacerbated by reports of unpaid contractors and dubious business practices, culminating in a controversial and graphic video posted by the project’s founder, Derivatives Monke, ostensibly as a joke for which he later issued an apology.

The actual launch of ZKasino, marred by delays, delivered a jarring surprise to its investors. Contrary to prior assurances, the ether could not be redeemed. Instead, it was converted into $ZKAS tokens as part of a “favor” to ensure a “seamless transition and superior user experience,” as stated by the project. This sudden pivot did not sit well with the community. The website’s original promises of ether refunds were quietly amended, with the new terms stipulating a fifteen-month vesting period for the $ZKAS tokens.

The backlash was immediate and fierce. Accusations of ZKasino conducting a rug pull spread rapidly, fueled by a growing dossier of personal information on Derivatives Monke shared by disgruntled investors desperate to recover their funds. In response to the turmoil, token launchpads Ape Terminal and AIT Launchpad withdrew their support for ZKasino’s IDO, while MEXC canceled its listing of $ZKAS. The majority of investors could only watch helplessly as their collective $33 million in ETH was locked into the staking platform Lido.

In the aftermath, the ZKasino team has largely remained silent, except for a brief interjection by Derivatives Monke to rebuke a critic on social media platform X. Recently, the project made an unremarkable announcement about its intention to integrate EIP-3074 following its activation on Ethereum. Despite the surrounding controversy, Derivatives Monke vowed to continue building, a sentiment echoed on X.