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On the evening of May 28th, the decentralized betting platform ZKasino, which had previously attracted 10,515 ETH (approximately $33.2 million) through its bridge reward campaign, announced through Medium that it would initiate the ETH bridge refund process for bridge participants who choose not to participate in the ZKAS conversion. Bridge participants can register by depositing their first batch of ZKAS bridge rewards they received, and once registered, they will forfeit the remaining 14 months of ZKAS token release.
How a Good Hand Was Ruined?
As a blockchain gaming infrastructure project, ZKasino completed its Series A financing round with a valuation of $350 million in March this year. Investors in the round included MEXC, Big Brain Holdings, Trading_axe, Pentoshi, and Sisyphus, among others. Although the specific amount of financing was not disclosed, the community seemed to have high hopes for the project’s future.
However, just a month later, Big Brain Holdings claimed that it had never invested in ZKasino but was provided with proportionally allocated tokens, which it did not receive and would not choose to accept. In mid-April, ZKasino announced that its bridge reward campaign had ended, with a total bridge funding of up to 10,515 ETH (approximately $33.2 million). However, the official announcement did not mention the specific time for withdrawals, and some users discovered that ZKasino had removed the statement “Ethereum will be refunded and bridged back” from the Bridge Funds interface, preventing users from making withdrawals.
In fact, rumors of fraud have been circulating in the ZKasino community. zkSync-based DEX ZigZag posted on the X platform, stating that several people have recently accused the ZKasino team of owing them money or engaging in some form of fraud. Several former employees and contractors also claimed that they had not received their remuneration. Ethereum co-founder Vitalik Buterin stepped forward to address the issue, pointing out that ZKasino did not use any “ZK” (zero-knowledge proof) technology and that it was simply hosted on the zksync platform. The term “ZK” was being exploited by scammers.
In early May, the Fiscal Information and Investigation Service (FIOD) in the Netherlands announced the arrest of a 26-year-old man on charges of fraud, embezzlement, and money laundering. The man was allegedly involved in a large-scale scam related to ZKasino, with global victims having invested over $30 million in cryptocurrencies on the platform. Dutch authorities seized over €11.4 million ($12.2 million) worth of cryptocurrencies, real estate, and luxury cars.
With the fraudulent activities coming to light, ZKasino seemed to have no choice but to refund the community.
A Promise to Return Investor Funds, Another Trick?
On May 28th, ZKasino announced the launch of a two-step bridge process, in which ETH would be returned to bridge participants who chose not to convert to ZKAS at a 1:1 ratio. The team also assured the community that they were still working hard and promised to continue their efforts to make the project successful. However, after this announcement, doubts still lingered in the community because it appeared that there were still some tricks in ZKasino’s two-step bridge process:
Firstly, ZKasino only allowed bridge participants a short 72-hour window to register (from May 28th, 14:00 UTC to May 31st, 14:00 UTC, all working days). Three days later, the registration function would be closed, and deposits would stop. This brief period of time could prevent many people from withdrawing their deposits. It is important to note that users must register using the original ETH bridge deposit address they received ZKAS bridge rewards on and then find their ZKAS on the ZKasino EVM chain before depositing the ZKAS back into the smart contract controlled by ZKasino.
Secondly, ZKasino seems to deliberately avoid mentioning the staking rewards obtained from user deposits. On-chain records show that after the Bridge-to-Earn program ends, ZKasino will convert investors’ ETH into Lido’s Wrapped Staked Ether. Given the current Lido staking yield of 3.3% and the recent rise in ETH prices, it is expected that the staking rewards generated will exceed $100,000. Some community members question why the platform requires them to go through another process instead of directly returning the ETH.
More importantly, whether intentionally or not, ZKasino once again avoids a crucial element: time. In the announcement, ZKasino stated that after registration concludes, they will collect registration data in the following days (no specific time frame mentioned) and will soon release a new announcement containing data on which addresses can claim the refund ETH for public verification (again, no specific time frame mentioned). ZKasino claims that after data verification, they will open the claim portal, and bridge participants will be able to claim their ETH at a 1:1 ratio from the new audited bridge contract on the Ethereum mainnet. Once again, no specific timeline is provided.
In summary, despite ZKasino’s insistence on its legitimacy, legal issues, investor suspicions, and the recent refund announcement have left many questions unanswered. As the 72-hour deadline approaches, the crypto community is closely watching whether ZKasino will truly fulfill its promises or if further complications will arise.