Zkasino Launch Sparks Public Anger As $33 Million Pledged To Investors Diverted To Lido

• The debut of ZKasino, a decentralized gambling network, has sparked anger among investors after a sudden change in plans by the developers prevented users from redeeming their bridged ether after the platform’s launch.
• The $33 million that users invested was sent to Lido, as the platform tries to move past what it describes as “noise and FUD.”

ZKasino seemed like any other promising crypto project at first glance. It had announced a Series A funding round with a $350 million valuation, supported by $26 million from investors, including the crypto exchange MEXC. The project’s smart contracts were audited by the renowned security firm Certik (after an initial review by ChatGPT), and its testnets were running smoothly.

By the time of the project’s launch, over 10,000 participants had bridged more than $33 million in ether to ZKasino’s network, expecting to receive additional $ZKAS tokens upon the protocol’s launch. The project had promised that the bridged ether could be returned upon users’ request, further fueling the enthusiasm.

However, some warning signs emerged. A rainstorm in Dubai that canceled ZKasino’s launch event was one thing, but accusations of mismanagement had been made against the team by former colleagues and blockchain investigator ZachXBT. A user representing the ZigZag exchange accused ZKasino’s team of misappropriating initial funds from ZigZag’s treasury. There were also allegations of unpaid contractors and questionable business practices. In one particularly memorable incident, ZKasino’s founder, known as Derivatives Monke, posted an explicit video to make a sarcastic joke but later issued an apology.

When ZKasino finally launched after several delays, investors were shocked to learn that plans had changed. Instead of allowing them to redeem their ether as promised, the funds were automatically vested into $ZKAS tokens, purportedly as a “favor” to “provide a seamless transition and a superior user experience,” according to the project’s announcement. This unexpected turn of events left investors feeling betrayed and questioning the integrity of the platform.

Users were outraged by the sudden change in plans, pointing out that the language on ZKasino’s website, which initially promised ether refunds, had been altered. Now, users’ $ZKAS tokens would vest over 15 months instead of being instantly redeemable. Allegations that ZKasino is a rug pull have been made by thousands of accounts, while personal information about Derivatives Monke, the founder, is being circulated online by furious investors seeking to recover their capital.

In response to the news, token launchpads Ape Terminal and AIT Launchpad canceled ZKasino’s IDO, while the exchange MEXC removed its listing for $ZKAS. Most investors could only watch helplessly as their $33 million in ETH was deposited into the staking platform Lido.

Amid the uproar, the ZKasino team has been mostly silent. However, Derivatives Monke, the founder, took time yesterday to insult a critic on X (formerly Twitter). The project’s only public statement since the launch was a seemingly benign announcement about plans to implement EIP-3074 when the protocol change is live on Ethereum. Derivatives Monke, quoting this post on X, assured followers that the project would continue to develop.

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