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Reported by The Block,at first glance, ZKasino looked like any other crypto project. It had announced a $350 million valuation for its Series A round, backed by $26 million from investors including crypto exchange MEXC. Its smart contracts were audited by the well-known security firm Certik (after an initial pass by ChatGPT). The project's testnets were operational.
And so by the time of the project's launch, over $33 million in ether was bridged by over 10,000 participants to ZKasino's network, hoping to score extra $ZKAS when the protocol launched. After all, the project promised that the ether could be returned at users' request.
However, there were warning signs. A deluge in Dubai cancelling ZKasino's event was one thing, but accusations of mismanagement had been leveled against the team by former colleagues and blockchain sleuth ZachXBT in the past. A user representing the ZigZag exchange alleged that the team behind ZKasino had stolen the initial funds for the project from ZigZag's treasury. Alongside other allegations of unpaid contractors and shady business practices, in one memorable incident, ZKasino's founder, known as Derivatives Monke, had also posted an incredibly graphic video to make a sarcastic joke, though they later apologized.
When ZKasino finally launched after several delays yesterday, investors were stunned to hear that the plans had changed. Rather than being able to redeem their ether as planned, it was automatically vested into $ZKAS tokens, as a "favour" in order to "provide a seamless transition and a superior user experience," or so the project announced.
Users revolted at news of the change, noting that language on ZKasino's website promising ether refunds had changed and now users' $ZKAS would vest over the course of fifteen months. Allegations that ZKasino is a rug pull have been levied from thousands of accounts as personal information about Derivatives Monke spreads online from furious investors hoping to recoup their capital.
Following the launch, token launchpads Ape Terminal and AIT Launchpad cancelled ZKasino's IDO while exchange MEXC cancelled its $ZKAS listing. Most investors, though, could only watch the blockchain as their $33 million in ETH was deposited into staking platform Lido.
Amidst the uproar, the team has remained mostly quiet, though yesterday Derivatives Monke took time to insult a critic on X. Today, the project posted a relatively benign announcement that it plans to implement EIP-3074 when the protocol change goes live on Ethereum. Derivatives Monke, quoting the post on X, promised to keep building.
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