Tampering with activity rules and delaying refunds, what exactly happened to ZKasino?

This weekend, ZKasino, a decentralized betting platform of ZK Ecology, was caught in a "runaway" storm: tampering with the website event introduction, refusing to return the ETH pledged by users to participate in the event, closing Telegram speaking rights, canceling the offline meeting in Dubai, and arbitrarily transferring user funds to Lido for staking... Many users questioned whether ZKasino had "soft rug"? This article will help you sort out what happened to ZKasino in just one weekend?

The whole story of ZKasino

Back to April 19, many community users found that after the ZKasino staking event ended, ETH refunds were delayed. Then, through the Wayback Machine, ZKasino deleted the sentence "Ethereum will be returned and can be bridged back" on the Bridge funds page of the official website on April 18, causing panic among users, questioning whether it was deliberately "taking money and running away." Users who participated in the staking activity flocked to the ZKasino official Twitter account to question, and Telegram also became a platform for rights protection. However, it didn’t take long for the ZKasino team members to close the Telegram speaking privileges.

On April 20, the MEXC trading platform, which originally planned to launch ZKasino (ZKAS) on the same day, issued an announcement that the launch and withdrawal of ZKAS would be postponed, and the recharge of ZKAS would be temporarily suspended. MEXC staff responded to ZKasino's "runaway" questioning, saying, "We are just one of the investors. The project's behavior has nothing to do with us. As investors, we are also victims." Perhaps due to pressure from multiple parties, ZKasino finally made a brief response: There are many FUD rumors at present. The ZKasino network will continue to go online, which was previously delayed (mainnet) due to the listing of the exchange.

However, users are not satisfied with this simple response. "When will the refund be made?", "Is it a soft run?", and "Why change the refund description of the mainnet" have become the main contradictions at present.

On April 21, according to the monitoring of on-chain analyst Yu Jin, ZKasino transferred 10,515 ETH that users had bridged into ZKasino to a multi-signature address, and then deposited it into Lido. These ETH were bridged into ZKasino for mining, but the ZKasino project team modified the official website description and forcibly replaced the ETH deposited by users with its platform tokens.

On April 22, Big Brain Holdings, which had previously been disclosed as one of the investment institutions of ZKasino, issued a statement to "refute the rumors" and denied participating in the financing of ZKasino.

So far, users' concerns seem to be being "confirmed" step by step. Some users also found that as early as March 16, Kedar, the founder of ZigZag, a DEX project in Ethereum Layer 2 ecosystem, had warned that ZKasino seemed to have problems. In Kadar's tweet, he mentioned that most of ZKasino's income was fake, and users should be cautious in participating in their ICO activities.

At present, ZKasino's latest tweet only announced the next plan of the project: "All ZKasino games will be transferred to the new chain - and will remain on Arbitrum and Polygon. Native DEX and stablecoins will be launched soon. The first batch of ZKAS was distributed to bridgers."

However, there was no congratulations or celebrations in the tweet reply, only users asked again and again: "When will the refund be issued?"

Suggestions and opinions of crypto VCs and KOLs

As a "star" project on ZK, many KOLs participated in and recommended the project in the early stage of its launch. Now that such negative events have occurred, these KOLs have naturally become the target of public criticism. In the field of Crypto, how to avoid pitfalls, and who should be held responsible when projects have problems? ABCDE Capital co-founder Du Jun, crypto KOL 0xSatoshis, @0xkillthewolf and others expressed their opinions, which BlockBeats summarizes as follows:

ABCDE co-founder Du Jun (@DujunX):

Regarding the project party running away, seeing that everyone is holding investment institutions and KOLs accountable, I think it makes sense but is a bit absurd.

In the field of Crypto, 95% of investment institutions are actually disadvantaged groups, licking the project party for quota, licking the platform for currency, and licking the LP for money. They are definitely licking dogs.

These institutions have nothing to do with the first few rounds of good projects, let alone DD to the project team. You should be thankful if you can send money to the address. KOLs seem to be strong and even some projects have KOL rounds, but they are actually at the bottom of the food chain and have no say. If KOLs do not receive money to shout orders, it is difficult to hold them accountable at the legal level, and they can only be morally condemned. Looking around, only the head exchanges are at the top of the food chain, and other roles are just playing soy sauce.

The project party ran away, and everyone looked for investment institutions and KOLs to defend their rights. Institutions and KOLs also invested real money, so who should they look for to defend their rights? In the jungle society of Crypro, we must pay for our investment results and keep learning in order to earn more and live longer.

Finally, I strongly condemn the runaway project and the KOLs who called for these runaway projects. I hope that the unscrupulous projects will be punished by law and the coins will be returned as soon as possible, so that everyone's wallets will be safe.

Niq (@niqislucky), a crypto art creator, replied:

Admit it: Most staking projects are just like transferring money to a "multi-signature address". Unless the team is well-known, VC brand endorsement is almost the entire trust basis for retail investors. KOL? Responsible for dissemination, and even taking the blame.

VCs are weak in comparison. If you can't get in when the gods gather, you are a novice. No matter how novice you are, you are still completely overwhelmed by information/funds for retail investors. They are not on the same level. Who should I empathize with when writing this? Retail investors just think it’s crocodile tears…

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Crypto KOL 0xSatoshis (@0xSatoshis):

In view of Zkasino’s soft run, I have reviewed all the staking projects today, except for ATOM+OSMO+TIA+DYM staking

Currently participating in the staking projects are:

1) swell+eigenlayer+renzo+puffer (within 20E in total)

2) Initial investment of 25E in blast, only 6E left now, serious inflation of points

3) lista more than 5000 U

4) merlin has pledged Runestone

5) bouncebit less than 10,000 U

Next, I will withdraw the principal from time to time, or reduce the position to a reasonable position (the so-called reasonable means zero, which is acceptable). I always feel that the risk of nesting doll pledge is very high now. One dollar is pledged once in A\B\C\D\E projects, and the TVL becomes 5 dollars, but the market is still only 1 dollar. What if the water runs away in the middle, or there is a hacker attack? The risk is continuous. It is better to withdraw part of it while there is still liquidity.

In addition, I emphasize again that you should not believe in KOL orders, including me, a small leek. Just study the content shared by others carefully. As for whether to invest in the end, you must decide for yourself. Investment is our own business. KOL provides us with content and information to assist us in decision-making.

For novices, it is recommended to participate in fewer staking projects. The principal is the first. Old leeks should control their positions and bet on low-cost crits.

Brothers, you can make less money, but you can't lose all. You must control your positions when staking. It is not recommended to use over-the-counter leverage to borrow money for staking. Nothing is impossible in web3. Don't always think that there will be no problems. Many people at FTX, including me, thought so at the beginning. No snowflakes are innocent during an avalanche, so do your own risk control in advance and be responsible for your own wealth.

Finally: All the projects I participated in in this article are just my own review, which does not constitute investment advice, and I am now reducing my positions. Please make your own judgment, DYOR!

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Crypto KOL killthewolf.eth (@0xkillthewolf):

ZKasino is a hot topic now. Although I did not invest in this project or participate in the pledge, a total of 4 people asked me whether I wanted to invest in this KOL round. I will write down my thoughts and experience here, hoping to help you screen projects in the future.

The KOL round valuation is 9 million US dollars, and TGE unlocks 15%. At first glance, this condition is a no-brainer, because the institutional valuation is 350 million US dollars, and I am 40 times cheaper than the institution. As for TGE only unlocking 15%, in fact, I only need 60 million US dollars of FDV to open the market to make my money back, and the institution has already given a valuation of 350 million US dollars.

The two main reasons why I didn’t participate in the end:

First, why is the valuation 350 million? Ethena, which was recently listed on Binance, is valued at 300 million, Puffer Finance is valued at 200 million, and ZKasino, a gambling platform, is valued at 350 million. Because of this valuation number, I am skeptical about this round of financing.

Second, the project claimed a revenue of 8 million yuan. Although everyone agrees that this number is somewhat exaggerated, I still checked the addresses of the top 20 users on the platform, and all of them were suspected to be small accounts of the project party.

Third, the founder’s character is very problematic. Before, their official account used a bloody video of a murder case to joke about marketing, and that incident was also a hot topic at the time. @zachxbt also exposed the various things this person had done: https://x.com/zachxbt/status/1731025316204745113

So from my perspective, the valuation of this project is fake, the revenue is fake, the character is bad, and there is no conscience, so in the end I did not participate, and fortunately I avoided a big pit.

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