Last month, the decentralized gambling platform ZKasino, which is suspected of scamming users and allegedly running away with over 10,500 ETH (worth over $40 million), responded late last night by announcing that they would refund ETH at a 1:1 ratio. However, users are only given a short 72-hour window to apply for a refund and must first return the received $ZKAS bridging rewards, sparking controversy once again.
Background information:
Cryptocurrency gambling platform ZKasino fraud: A suspect arrested in the Netherlands, seizing a total of $12.2 million in cryptocurrency assets.
Accused by the community and Dutch authorities of being a Rug Pull scam, ZKasino, a DeFi gambling platform suspected of running away with over 10,500 ETH (currently valued at over $40 million), pledged to refund ETH at a 1:1 ratio on the 29th of last month. However, investors only have a 72-hour window to apply for a refund, which has caused backlash within the community.
In March of this year, ZKasino launched a reward program that allowed users to bridge their ETH and earn their own token, $ZKAS. The program attracted over 10,000 participants and raised over 10,500 ETH (valued at approximately $32 million at the time of the controversy). However, in late April, it was revealed that the project was embroiled in a Rug Pull controversy:
On April 18th, ZKasino was found to have removed the sentence “Ethereum will be returned and can be bridged back” from its bridging website Bridge funds. The official Telegram channel was also set to mute, leading the community to question whether the project was running away with the funds.
On April 21st, chain analyst Yu Yan monitored that the project had transferred all the ETH deposited by users into ZKasino to a multi-signature address and then pledged it in Lido for interest.
On April 21st, ZKasino also modified the website description and forcibly converted the ETH deposited by users into the project’s native token, $ZKAS.
On May 3rd, the Fiscal Information and Investigation Service (FIOD) of the Netherlands announced the arrest of a male suspect in the “ZKasino fraud case” and seized assets worth 11.4 million euros ($12.2 million), including real estate, luxury cars, and various cryptocurrencies.
On May 10th, ZKasino founder Derivative Monke publicly denied the allegations of running away with funds, stating, “We strongly oppose FIOD and Binance’s claims of ZKasino implementing an ‘exit scam’ or ‘Rug Pull’.”
Limited 72-hour window to apply for ETH refund
Finally, last night, ZKasino announced on its official blog that they have initiated a 72-hour “two-step bridging process” for users who chose not to participate in the $ZKAS conversion to bridge and retrieve their ETH. However, these users only have a deadline of 3 days, from May 28th, 14:00 (UTC) to May 31st, 14:00 (UTC), to apply for a refund. They also need to bridge back the initial batch of $ZKAS bridging rewards received from ZKasino in order to be eligible for a refund.
According to the official statement, the specific refund process is as follows:
Within 72 hours, register and apply for bridging: Users must use the original ETH bridging deposit address where they received the $ZKAS bridging reward to bridge back the $ZKAS to the smart contract controlled by ZKasino. However, it is emphasized that refund applicants will lose any allocated $ZKAS rewards, including the remaining 14 months of linear release of $ZKAS.
The officials will take several days to collect data and share publicly which addresses can claim the ETH for verification.
Open the claims portal website.
ZKasino claims that they have not abandoned the project, but they did not mention how the ETH staking rewards from Lido will be handled. DL News pointed out that, based on Lido’s current staking yield of 3.3% and Ethereum’s recent price increase, the value of the staking rewards obtained by ZKasino exceeds $100,000.
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