At first glance, ZKasino seemed to be a typical new entry in the crypto world. It boasted a $350 million valuation following its Series A round, supported by $26 million in investment from backers including the cryptocurrency exchange MEXC. Its smart contracts were verified by the prominent security firm Certik, with an initial review by ChatGPT. The project’s test networks were also up and running successfully.
By the launch date, the excitement was palpable, with over $33 million in ether transferred to ZKasino’s network by more than 10,000 participants, drawn by the promise of receiving additional $ZKAS tokens. The project assured investors that their ether could be reclaimed upon request.
However, several red flags had emerged. An unexpected cancellation of ZKasino’s event in Dubai was a minor issue compared to past accusations of mismanagement by former team members and blockchain investigator ZachXBT. A representative from ZigZag exchange claimed that ZKasino’s team had misappropriated initial project funds from ZigZag’s treasury. Furthermore, allegations of unpaid bills and dubious practices surfaced, along with a controversial incident where ZKasino’s founder, known as Derivatives Monke, posted a graphic video online as a joke, though he later issued an apology.
When ZKasino finally went live after several delays, the terms abruptly changed. Instead of allowing investors to withdraw their ether, the funds were automatically converted into $ZKAS tokens, described by the project as a “favour” to ensure a “seamless transition and a superior user experience.”
This sudden shift led to an uproar among users, especially after noticing that ZKasino’s website had altered its refund policy to state that $ZKAS tokens would now vest over fifteen months. Accusations of a “rug pull” — a scam where developers quickly cash out leaving investors with worthless assets — began circulating, fueled by personal attacks on Derivatives Monke as affected investors sought to recover their funds.
In the aftermath, token launch platforms Ape Terminal and AIT Launchpad canceled ZKasino’s initial DEX offering (IDO), and MEXC withdrew its listing of $ZKAS. Most investors were left powerless, watching as their collective $33 million in ETH was transferred to the staking platform Lido.
Amidst the chaos, the ZKasino team has largely kept silent, except for an incident where Derivatives Monke responded harshly to a critic on X. The most recent communication from the project announced plans to adopt EIP-3074 upon its activation on Ethereum, with Derivatives Monke promising on X to continue developing the project.
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