Blockchain gambling project ZKasino faces backlash on X after transferring $33 million worth of investor and user funds to staking protocol Lido, deviating from its initial plan to return the funds.
In an April 20 blog post, ZKasino announced the launch of its network, surprising over 10,000 users who had bridged 10,515 Ether to the network with the expectation of receiving their ETH back as promised.
Contrary to expectations, ZKasino revealed that all bridged ETH was converted to ZKAS tokens at a discounted rate of $0.055, distributed over a 15-month vesting schedule.
Users noted changes in ZKasino’s website, including the removal of a statement promising ETH return, raising concerns about misrepresentation.
Concerns escalated when on-chain data revealed ZKasino transferred all users’ ETH to the staking protocol Lido.
An anonymous developer questioned ZKasino’s technical claims, stating that its blockchain lacked zero-knowledge technology despite assertions otherwise.
Numerous X users accused ZKasino of being an exit scam, with some revealing personal information about the project’s founder, “Derivatives Monke,” and calling for legal action.
Venture capital firm Big Brain labeled ZKasino as potentially fraudulent, refuting claims of investment and stating it never received promised token distributions.
Crypto exchange MEXC clarified that it was merely one of ZKasino’s investors and distanced itself from the project’s actions, asserting victimhood as an investor.
Despite the uproar, ZKasino remained mostly silent on X, with the project posting mundane updates unrelated to the controversy.
“Derivatives Monke” responded to criticism by sharing the project’s latest X post and encouraging continued development efforts.
ZKasino, its founder, parent firm ZigZag Labs, and MEXC have not yet responded to requests for comment regarding the allegations.
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