ZKasino, a blockchain-based gambling project, recently faced backlash and controversy after it abruptly shifted $33 million worth of investor and user funds to the staking protocol Lido, deviating from its initial plan to return the funds to its users. The project had initially announced the launch of its network on April 20, with over 10,000 users bridging a total of 10,515 Ether (ETH) in hopes of acquiring the ZKasino (ZKAS) token. Instead of returning the ETH as promised, ZKasino converted it to ZKAS at a discounted rate of $0.055, subject to a 15-month vesting schedule, citing the need for a smooth transition as its chain did not utilize ETH.
Concerns regarding ZKasino escalated when users noticed that the project had altered the wording on its website, removing the statement guaranteeing the return of the ETH. Additionally, an on-chain transfer revealed that all 10,515 ETH from users had been moved to the Lido staking protocol. A crypto developer named “cygaar” raised suspicions that ZKasino’s released blockchain was merely an Arbitrum Nitro chain, lacking the zero-knowledge technology or EigenDA that the project claimed to have. This led to accusations on social media platforms, with many users accusing ZKasino of being an exit scam and sharing personal information about the project’s founder, known as “Derivatives Monke,” while calling for legal action.
Further controversy arose when venture capital firm Big Brain claimed that ZKasino appeared to be fraudulent, stating that they had never invested in the project and had not received the pro-rata token distribution promised to them. Big Brain had previously announced their participation in a Series A investment round with a valuation of $350 million for ZKasino, along with support from crypto exchange MEXC. However, MEXC distanced itself from the project, stating that its behavior had nothing to do with them. Amidst the backlash, ZKasino remained largely silent on social media, with the project only posting an update about integrating EIP-3074.
Despite the controversy surrounding ZKasino, the Ethereum network has continued to grow, surpassing one million validators with approximately 32 million Ether staked within the network, worth around $114 billion. Data from the Dune Analytics dashboard show that the validator count reached one million on March 28, with the 32 million ETH staked representing approximately 26% of the total supply. This highlights the substantial commitment to Ethereum’s proof-of-stake (PoS) consensus mechanism. As the situation with ZKasino unfolds, stakeholders in the blockchain community are closely watching to see how the project addresses the concerns raised and whether it will be able to regain the trust of its users and investors.
