ZKasino: Uncovering the $33 Million Rug Pull

TL;DR

Prepare to roll the dice on a jaw-dropping crypto caper! In a tale that reads like a high-stakes thriller, discover how ZKasino pulled off a $33 million rug pull, leaving investors reeling. Uncover the clues, dodge the traps, and delve into the dark side of the crypto world in this must-read expose!

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The crypto gambling platform ZKasino pulled off a staggering $33 million rug pull over the weekend, exploiting the trust of its users and investors.

Despite numerous red flags, including abruptly canceled token listings, evasive team responses, dubious technological claims, and reports of unpaid employees and contractors, ZKasino managed to amass a substantial amount of capital.

In a bold move, the platform converted over 10,500 ETH, worth $33 million, into $ZKAS tokens at an inflated price without user consent. As evidence of the scheme mounted, ZKasino shut down its communication channels and banned users who raised concerns.

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The platform claimed to have raised $26 million in a Series A funding round for a $350 million valuation, attracting major investors like MEXC, Big Brain Holdings, Trading Axe, Pentoshi, and  Sisyphus.

Big Brain Holdings reported receiving a token distribution offer from ZKasino, which it declined. This decision appears to be an effort to distance itself from the fraudulent project.

However, suspicions were present from the start, particularly regarding CEO and founder Ildar Elham, also known as Derivatives Ape. Elham's history includes the failed ZigZagExchange and Syncus projects, and it's alleged that funds from ZigZag were misused to secretly build ZKasino.

According to tweets from the official ZigZagExchange account, Elham was one of the founders involved in a $15 million fundraise for ZigZag. Allegedly, as one of the 3/5 multisig signers, Elham and the other ZKasino founders misused these funds to secretly build out ZKasino instead.

The project appears to be built on a foundation of lies. Critics have noted that ZKasino's marketing buzzwords, such as 'zk' (zero-knowledge) technology and 'EigenDA' (for data availability), have no real connection to the platform's actual operations.

Critics highlighted the discrepancy between ZKasino's marketing claims and reality. The platform touted advanced technologies like zkSync and EigenDA, but in truth, it was simply running on the more basic Arbitrum Nitro chain.

False advertising was merely a symptom of ZKasino's dubious operations. As early as December, ZachXBT had been raising alarms about the project's founder and team, highlighting multiple instances of unethical behavior:

• Failing to pay money owed to Pancakesbrah.

• Not announcing winners for their $200K giveaway after two months.

• Avoiding payment to CL207 for a bet.

• Using a gore video from a recent murder to market their casino.

• Not reimbursing people after their team member was phished.

These allegations painted a picture of a team with little regard for integrity or accountability long before the rug pull.

The Series A investors were subjected to terms of 15% TGE, a three-month cliff, and 15-month linear vesting—terms that were ultimately imposed on user funds without disclosure. Planned IDOs on ApeTerninal and AIT Protocol were canceled without explanation, adding to the suspicion.

In their Telegram investor chat, team member XBT_Prometheus repeatedly downplayed concerns, insisting, "We're still building," "People always FUD, it's normal," and "We didn't scam anything," even as questions mounted.

The ZKasino CEO promised users a clean payout if they locked their ETH to farm the $ZKAS token, vowing to let them withdraw initially deposited ETH at a 1:1 ratio later on. However, the platform instead converted over 10,500 ETH worth $33 million into $ZKAS at an inflated price without consent. To compound the scheme, that ETH was then staked on Lido, locking up the funds with a 15-month vesting schedule that was never disclosed.

The site’s bridge webpage (now offline) previously stated that once the chain was live, funds would be "returned and can be bridged back." Deleted tweets and audio clips confirmed the same promises.

In the end, ZKasino's trail of red flags, deception, and unethical practices was glaringly obvious to anyone who cared to look. This rug eventually unraveled into one of the most blatant crypto exit scams of the year. If ZachXBT calls something a scam months in advance, it's wise to heed the warning and exit swiftly.

Who would want to gamble at a casino where only the house wins?

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The shady history of the founder should have raised concerns about his ability to lead a legitimate project. However, investors and users seemingly overlooked these warning signs. Allegations of unpaid employees and contractors, as well as claims of mismanagement from sources like ZachXBT, hinted at deeper issues within the ZKasino team and operations.

ZKasino made inflated claims about using advanced technologies like zkSync, when in reality, the platform was simply running on the more basic Arbitrum network. This blatant discrepancy between their marketing and the actual technology should have erased any last shreds of credibility.

The abrupt cancellation of ZKasino's token listings without clear explanations was another glaring red flag. Such last-minute changes, especially without transparency, should have been seen as potential signs of trouble brewing behind the scenes.

Investors and users ignored the warning signs, lured by the prospect of high returns. In the end, ZKasino proved to be a losing bet, a stark reminder of the risks inherent in the crypto world.