Crypto News – Controversial Launch of ZKasino Sparks Investor Outrage and Allegations of Mismanagement

Crypto News – Controversial Launch of ZKasino Sparks Investor Outrage and Allegations of Mismanagement

Crypto News – Initially, ZKasino appeared to be just another crypto venture. With a touted $350 million valuation for its Series A round and backing of $26 million from investors, including the crypto exchange MEXC, it seemed to have the right ingredients. The project’s smart contracts had undergone audits by the reputable security firm Certik (following an initial check by ChatGPT), and its testnets were up and running.

By the time of its launch, over $33 million worth of ether had been bridged by more than 10,000 participants to ZKasino’s network. They hoped to capitalize on the promise of receiving additional $ZKAS tokens when the protocol launched, with the reassurance that their ether could be returned upon request.

However, red flags began to emerge. An abrupt cancellation of ZKasino’s event in Dubai was notable, but more concerning were allegations of mismanagement made by former colleagues and blockchain investigator ZachXBT. A representative of the ZigZag exchange accused ZKasino’s team of siphoning off funds from ZigZag’s treasury to kickstart their project. These accusations were compounded by reports of unpaid contractors and questionable business practices. Notably, ZKasino’s founder, known as Derivatives Monke, had caused controversy by posting an extremely graphic video as a sarcastic joke, although they later issued an apology.

When ZKasino finally launched after multiple delays, investors were blindsided by changes to the plan. Instead of offering the promised ether refunds, the funds were automatically converted into $ZKAS tokens, justified as a “favor” to ensure a smooth transition and enhance the user experience, as the project claimed.

This decision triggered outrage among users, especially as language on ZKasino’s website regarding ether refunds had been altered, and the conversion to $ZKAS tokens was now subject to a fifteen-month vesting period. Accusations of ZKasino being a “rug pull” flooded social media, while personal information about Derivatives Monke circulated online, fueled by furious investors desperate to recover their investments.

In the aftermath, token launchpads Ape Terminal and AIT Launchpad pulled the plug on ZKasino’s IDO, and exchange MEXC scrapped its plans to list $ZKAS. Meanwhile, most investors could only watch helplessly as their $33 million worth of ETH was deposited into the staking platform Lido.

Despite the uproar, the ZKasino team largely remained silent, with Derivatives Monke only taking time to exchange barbs with a critic on X. Today, the project released a relatively innocuous announcement of its intention to implement EIP-3074 when the protocol change is deployed on Ethereum. Derivatives Monke, echoing the sentiment on X, pledged to continue with the project’s development efforts.