Ethereum co-founder Vitalik Buterin said the issues with ZKasino were evidence that the term “Zero-Knowledge (ZK)” has gained enough prominence in the industry to attract misuse by fraudulent actors.

Buterin’s comment followed revelations that the blockchain-based gambling platform rugged its users — resulting in the loss of roughly $33 million worth of Ethereum (ETH).

According to Buterin:

“There is nothing “ZK” about ZKasino except that it lives on zksync, correct? I guess we have to adapt; even “ZK” is now a mainstream-enough buzzword that full-on scammers are adopting it.”

Remarkably, the project has continued posting on its official account on the social media platform X while ignoring community concerns.

ZKasino rugpull

On April 21, concerns about ZKasino emerged when community members noticed the removal of a previous commitment to refund over 10,500 bridged Ethereum used for ZKAS token farming.

Subsequently, on-chain data revealed that the company had placed users’ ETH into the Ethereum-based liquid staking protocol, Lido.

In their statement, ZKasino’s team asserted they acted in the community’s interest by converting all bridged ETH to ZKAS at a discounted rate of $0.055, subject to a 15-month vesting schedule.

This explanation triggered widespread condemnation and scrutiny from the crypto industry.

Crypto sleuth ZachXBT highlighted the dubious history of ZKasino founder Ildar Elham, pointing out past instances of non-payment of debts, delayed giveaway announcements, evasion of bet payments, and failure to reimburse users following an internal phishing attack.

Furthermore, crypto developer Cygaar alleged that ZKasino’s blockchain was an Arbitrum Nitro chain deployed in two minutes. He added that the chain lacked zero-knowledge technology or EigenDA, contrary to the project’s claims.

Investors disavow

Following recent events, numerous investors and supporters of ZKasino have distanced themselves from the project.

MEXC, a prominent exchange supporter of the platform, canceled its planned listing for the ZKAS token. MEXC had participated in the protocol’s Series A funding round.

Additionally, venture capital firm Big Brain said ZKasino “appears to be fraudulent” and clarified that it had never invested in the project. It added:

“We have never invested in ZKasino but were offered a pro-rata token distribution that we have not received and will not opt to receive.”

The post Vitalik Buterin addresses ZKasino’s misuse of ‘zero-knowledge’ in $33M scam appeared first on CryptoSlate.

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Filed under: Bitcoin - @ April 24, 2024 5:25 pm