$33M in Promised Refunds Redirected to Lido, Leaving ZKasino Users Furious

ZKasino, a gambling project based on blockchain technology, has received criticism for diverting $33 million worth of funds from investors and users to the staking protocol Lido, contrary to its initial plan of returning the funds. The project announced the launch of its network on April 20, but instead of returning the funds as promised, ZKasino converted all bridged Ether to its own ZKasino (ZKAS) token at a discounted rate and on a 15-month vesting schedule. The project removed a statement from its website that stated the Ether would be returned, raising concerns among users. These concerns grew when ZKasino transferred all the Ether to the staking protocol Lido. An anonymous crypto developer accused ZKasino of deploying an Arbitrum Nitro chain instead of using the promised zero knowledge technology or EigenDA.

On social media platform X, numerous posts from alleged ZKasino users who had invested in the project claimed that it was an exit scam. Some even shared personal information and the address of ZKasino’s founder, known as “Derivatives Monke,” calling for legal action. Venture capital firm Big Brain added to the controversy by stating that ZKasino appeared to be fraudulent and denying any investment in the project. ZKasino had previously claimed to have closed a Series A investment round with a $350 million valuation and the support of crypto exchange MEXC and venture firm Big Brain Holdings, among others. MEXC distanced itself from ZKasino’s actions, emphasizing that it was merely one of the investors and claiming to be a victim as well.

ZKasino, its founder, its parent company ZigZag Labs, and MEXC have yet to respond to requests for comment. The project has remained largely silent amid the backlash, only posting a routine update about integrating EIP-3074 on X. Derivatives Monke, in response to criticism, shared the project’s latest post with the comment “keep building.”