In a controversial move that has sent shockwaves through the cryptocurrency community, ZKasino, a blockchain-based gambling platform, is facing severe backlash after redirecting $33 million worth of Ethereum (ETH) to the staking platform Lido without the consent of its investors.
Background of the Incident
ZKasino, which operates on-chain gambling services using technologies like zkSync and EigenDA, had initially raised $26.2 million at a valuation of $350 million. As part of its operations, the platform opened a token bridge allowing investors to deposit Ether to earn ZKAS, ZKasino’s native token.
Investors were under the impression that their bridged Ether would be returned after the bridging phase. However, in a sudden turn of events, ZKasino announced that the Ether had been converted to ZKAS tokens at a discounted rate, and the funds were subsequently sent to Lido.
The Investor Reaction
The decision has not sat well with the community. Over 10,000 users who deposited their Ether are now demanding refunds, expressing their frustration and dismay on social media platforms. The outcry has been significant, with users accusing ZKasino of an exit scam and altering the terms of the refund without prior notice, according to Coindesk.
The Response from ZKasino
As of now, ZKasino has not provided an official response to the wave of criticism from depositors. The lack of communication has only added fuel to the fire, with investors becoming increasingly vocal about their demands for a refund.
The Broader Implications
The incident has also caught the attention of venture capital firms, with one firm, Big Brain, claiming that ZKasino appears to be fraudulent and stating that it never invested in ZKasino despite being offered a pro-rata token distribution. This controversy could potentially lead to increased regulatory scrutiny and a push for greater transparency and accountability in cryptocurrency projects.
Moreover, the fact that ZKasino is operating without a valid license could further complicate the legal landscape for the platform. As the situation continues to develop, it remains to be seen how the legal implications will unfold for ZKasino and its founders.
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