Original｜Odaily Odaily
Author: Wenser
On April 21, amid many discussions about the suspected absconding of the Rug project, the decentralized betting platform ZKasino, which had previously attracted 10,515 ETH (approximately 33.2 million US dollars) through a bridge reward event, performed a "sassy operation" .
After deleting the description "Ethereum will be returned and can be bridged back at this point" mentioned on the official website event page, the project team first transferred the huge amount of assets deposited by users to the 0x791 multi-signature address , and then deposited it into the staking agreement Lido for interest. Later, the project Official Twitter still posted that it will integrate EIP-3074 when the ZKasino chain is launched, and will still focus on its own mission.
It took ZKasino less than a month to go from a star project with a $350 million Series A valuation to a high-risk Rug project that has attracted FUD across the entire network.
Today, Odaily Odaily will review with you this "big gambling" storm involving more than 10,000 ETH.
1. Uncovering ZKasino: A “star project” backed by a mature team and top-notch narrative?
Team + narrative, this is why ZKasino was able to gain high attention from the market in a very short period of time, but what users who participated in the platform's bridge reward activity did not expect was that the final problem also came from these two aspects. Looking back, when the bridge reward activity started, a "big gamble" had already begun.
Team background: Founding members of Zigzag and Syncusfi participated
Clicking into the ZKasino official account follow list , you will see the personal accounts of the two founding members of the project, Prometheus and Derivatives Monke . Coincidentally, the two not only participated in the well-known DEX project Zigzag Exchange on zkSync, which raised $15 million, but also jointly created the DeFi project Syncusfi .
Although Zigzag suffered heavy losses in the UST depegging incident, and Syncusfi is also a stablecoin ecological protocol built by referring to the (3, 3) growth flywheel model of Olympus (OHM), the project experience gained from participating in mature projects has made many users place high hopes on the two, and thus have established a certain degree of trust in ZKasino.
On March 19, the official account of ZKasino announced the completion of a Series A financing with a valuation of US$350 million, with participation from MEXC, Big Brain Holdings, Trading_axe, Pentoshi and 0xSisyphus . It is worth mentioning that the news has not been explicitly denied by these institutions and individuals.
Just like that, with a mature team and impressive financing, a "star project" began its performance.
ZKasino official financing picture
Top narrative: From decentralized betting platforms to on-chain gaming Layer 2
ZKasino was active in the market as a decentralized betting platform in its early days. Previously, the platform has launched gambling games and lottery events many times, and supports fund betting on multiple networks including Polygon and Arbitrum . In addition, when PEPE was popular last year, ZKasino also officially announced that it supports PEPE as a betting token.
On March 12, ZKasino officially announced that after 10 months online, the ZKasino platform has made a total profit of US$6.9 million, the total number of users has exceeded 35,000, the total number of bets has exceeded 6.9 million, the total amount of bets has exceeded US$390 million, and it will launch its own super chain, "so that anyone can deploy a gaming platform like ZKasino."
Since then, ZKasino has transformed itself and successfully achieved a narrative shift from a gambling platform to a gaming ecosystem.
On March 16, ZKasino officially announced that the ZKasino bridge will be launched soon, and users who participate in the fund bridging activity will receive ZKAS token rewards. Subsequently, it has issued several articles, not only clearly stating that the earlier users deposit funds, the more token rewards they can get, but also launching a rebate mechanism to encourage users to invite more people to join.
On April 5, ZKasino officially announced that the bridge deposit amount has exceeded 10,000 ETH.
On April 11, the IDO platform ApeTerminal welcomed its 33rd IDO project , ZKasino, which is based on the concept of "the first GambleFi layer-2". The introduction mentioned that the total amount of bets placed by users on the platform has exceeded US$390 million, and the number of bets has exceeded 7.6 million times. "ZKasino has become the first on-chain casino to accumulate a large user base before the token is listed."
Rug Signal: Platform rules change every day, users cannot withdraw funds
On April 16, ZKasino officially announced that the bridging reward activity had ended, with more than 10,000 users participating. According to on-chain data, the final bridging funds were 10,515 ETH (about 33.2 million US dollars). But what is intriguing is that the project officials did not mention when withdrawals would be opened. At this time, many users who participated in the activity did not pay attention.
On April 20, according to the comparison of the Wayback Machine history page, ZKasino deleted the sentence "Ethereum will be returned and can be bridged back at this point." mentioned in the Bridge funds introduction on its official website. Users who were late to the party only then remembered to check whether their deposited funds could be withdrawn, but the result was obviously disappointing. At this time, the last update of the ZKasino official account was 4 days ago. For a time, the news that the ZKasino project Rug ran away gradually spread.
ZKasino official website interface content before and after comparison
2. Event reversal: IDO cancellation, investment institutions speak out
What was originally a good operation activity of "I deposit money and exchange it for your platform tokens" was turned into a "Crypto honeypot" where "you can only enter but not exit" by ZKasino. While countless excited users were waiting for the official response of ZKasino, they also transferred their anger to the previous IDO platform and investment institutions and questioned them.
IDO Platform: Pay close attention and refund later
On April 20, after receiving feedback from users, IDO platform Ape Terminal stated that it is closely monitoring the situation of the decentralized betting platform ZKasino, which was selected for its well-known founder, high TVL and large user base; if the situation worsens, the IDO sale will be canceled and the 2 million USDC user funds raised will be refunded.
On April 21, Ape Terminal issued a statement saying that due to the recent situation of ZKasino, its IDO has been cancelled; all participants will receive a refund, and stablecoin claims are now online.
In addition, Jacky, COO of AIT Protocol, another platform that initiated an IDO for ZKasino, also issued a statement saying that due to unforeseen risks, all ZKasino-related IDO funds have been refunded, and an additional US$15 has been transferred to all participating addresses to cover the Gas cost of participating in the IDO.
Listing Exchange: Cancel the ZKasino Listing Plan
On April 20, in response to the ZKasino official announcement on the postponement of the ZKAS token listing , MEXC Exchange subsequently issued an announcement to cancel the launch of ZKasino (ZKAS). This was also regarded by many as a major reason for the ZKasino project Rug to run away, causing FUD to intensify.
Investors: Some are victims, some deny, and some have no response
Regarding the suspected identity of ZKasino as Rug, the investment institutions and individuals mentioned in the official announcement of the project had different opinions.
On April 21, MEXC staff responded to the source, saying : "We are just one of the investors. The project's behavior has nothing to do with us. As an investor, we are also victims."
On the evening of April 21, investment institution Big Brain Holdings issued a statement saying that it invested in the ZigZag Exchange project in 2022 and suffered financial losses. Some of the former founders of the project are now members of the fraudulent ZKasino project team. They also stated: They have never invested in ZKasino, have not received and will not accept its token allocation.
Among other investors, only Sisyphus retweeted tweets related to the ZKasino incident many times, including a tweet analyzing the Rug incident of the ZKasino project, apparently to express his own attitude and distance himself from the project.
Other investors such as Trading Axe and Pentoshi did not directly respond to this matter.
3. Latest progress: The project continues, but there is no explanation for where the funds went
As of the time of writing, ZKasino’s latest official statement mainly includes 4 tweets:
The first tweet , published on April 20, stated: There is a lot of FUD, but the ZKasino network will still be launched, but the listing on exchanges will be delayed.
The second tweet , published around 5am on April 21, reads: “What’s next? All ZKasino games will be ported to the new chain — they will remain on Arbitrum and Polygon. Native DEX and stablecoins will also be launched soon. The first batch of ZKAS tokens will also be distributed to bridge event participants.”
It is worth mentioning that this tweet was published exactly 2 hours after the ZKasino project deposited 10,515 ETH (about 33.2 million US dollars) deposited by users of the previous bridge reward activity into Lido for interest .
The third tweet was a tweet with a Medium article, which read "ZKasino chain is now live. Welcome to the future of blockchain games." Chain detective ZachXBT replied in the comment section : "Many people sent $30 million to a known scam team and expected it to be different. Stop labeling me, why do you still expect me to post, but you didn't listen to my warnings about this team last year." ZachXBT also attached a warning tweet he posted in December last year against Derivatives Monke , a founding member of ZKasino.
On the evening of April 21, ZKasino officials still acted as if nothing had happened and released a tweet titled "EIP-3074: A Game Changer for the ZKasino Chain", saying that "Zkasino chain will integrate EIP-3074 when it goes online. Although new technologies are often affected by noise and FUD, we remain focused on our mission." However, ZKasino officials did not mention the whereabouts of the funds previously deposited by users and the subsequent arrangements.
It has to be said that ZKasino is a rare project in the Crypto field. On the one hand, it takes the users' funds for itself and deposits them into staking agreements to earn interest; on the other hand, it can confidently say that it is focused on its own mission with a "Buidler" attitude.
Summary: What has happened will happen again
According to community news, in addition to many users trying to get an explanation from ZKasino, some people have already called the police in Dubai and intend to "offline protect their rights" against ZKasino founding member Prometheus and others.
Sadly, Zigzag founder Kedar had posted on the project's official account as early as March that many people had recently accused the ZKasino team of defaulting on payments or defrauding in some way, and that several former employees and contractors had said they had not been paid for their work. He also contacted one of ZKasino's investors to inform him that the project's revenue was fake, and the latter said that they did not actually participate in the financing, so ZKasino's financing and valuation were likely fake.
Unfortunately, as the philosopher Hegel said, the only lesson that mankind can learn from history is that mankind does not learn from history. What has happened will happen again. I just hope that more people can do DYOR before participating in project investment, so that people with "criminal records" will not continue to poison the industry.
Stay SAFU!
