ZKasino Ethereum Bridge Rugpull
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ZKasino was building an online crypto-betting platform. To build up liquidity for their protocol, they offered that users who deposited ethereum into a bridging contract could receive a return in ZKAS tokens, plus be able to withdraw their ethereum after 30 days when the protocol launched. Rather than allow the withdrawals, the administrators took the ethereum and deposited it into Lido. The bridging website was taken offline and complainers were removed from the various social media channels.
This is a global/international case not involving a specific country.[1][2][3][4][5][6][7][8][9]
About ZKasino
"Welcome to ZKasino, a revolutionary decentralised, crypto betting platform and blockchain casino:
Decentralised: all contracts are verified on the blockchain, all outcomes are provably fair and on-chain verified by VRFs, there are no sign-ups to or deposits into a centralised entity.
Crypto betting: all wagers are placed in cryptocurrencies directly through Web3-wallets;
Platform: a general betting platform for any type of betting, such as casino games, PvP games and sports betting.
ZKasino aims to be the most fair and transparent platform with the lowest house edge compared to all other betting platforms."
"ZKasino's bridge mechanism stands out by offering participants the chance to earn ZKAS tokens as they contribute to the ecosystem's liquidity. Drawing from the Blast model with a limited timer, this initiative not only facilitates the transition to the ZKasino network but also rewards early participants generously."
"We care about you and are here to protect you. If you are a vulnerable player, if you struggle with addiction or if you're running into issues because of gambling, we are here to help."
"The is better than a presale. Our
"The shady history of the founder should have raised concerns about his ability to lead a legitimate project like ZKasino successfully.
However, investors and users seemingly overlooked or ignored these warning signs about the founder's past.
Furthermore, there were allegations of unpaid employees and contractors, as well as claims of mismanagement from sources like ZachXBT.
These reports hinted at potential issues within the ZKasino team and operations, which should have prompted further scrutiny and due diligence from those considering investing or participating in the platform.
ZKasino made inflated claims about using advanced technologies like zkSync, when in reality, the platform was simply running on the more basic Arbitrum network."
"Despite red flags like abruptly canceled token listings, shady team responses, pumped tech claims, and unpaid employees/contractors, ZKasino still managed to raise a massive war chest."
"To begin with, most notably, their CEO promised to reward users with $ZKAS tokens (farm), who deposited their $ETH > and with the possibility to withdraw their initial staked $ETH on a 1:1 ratio"
"Secondly, without any proposal and asking the community - Zkasino converted all deposited $ETH to $ZKAS tokens with 5% unlock on TGE and 15-month vesting (which has never been mentioned before)" "10 515 ETH (~$33M) were stolen and deposited to Lido"
"In the end, protocol went dark on every communicational channel such as Telegram (CLOSED) & Discord (users who ask/complain about that fraudulent activity are muted instantly)"
This is a global/international case not involving a specific country.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| April 20th, 2024 10:23:00 AM MDT | Recordings Provided | Audio recordings are provided of the project founder talking about the ability to get back ethereum. |
| April 20th, 2024 9:06:00 PM MDT | 0xEverybody Tweet | 0xEverybody tweets asking why the original Tweet promising that ethereum could be received was deleted. |
| April 21st, 2024 7:33:00 AM MDT | DeFi Security Tweet | A Tweet by DeFi security warns about the situation. |
Technical Details
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
Total Amount Lost
10 515 ETH x $3,157.63 = $33.202m (~$33M)
The total amount lost has been estimated at $33,202,000 USD.
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
The total amount recovered is unknown.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
Individual Prevention Policies
No specific policies for individual prevention have yet been identified in this case.
For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.
Platform Prevention Policies
Policies for platforms to take to prevent this situation have not yet been selected in this case.
For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.
Regulatory Prevention Policies
No specific regulatory policies have yet been identified in this case.
For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.
References
- ↑ Rekt - ZKasino - Rekt (Apr 23, 2024)
- ↑ https://play.zkasino.io/ (Apr 23, 2024)
- ↑ Welcome | ZKasino Documentation (Apr 23, 2024)
- ↑ Responsible Gaming | ZKasino Documentation (Apr 23, 2024)
- ↑ ZKasino Bridge - Maintenance" (Apr 23, 2024)
- ↑ @De_FiSecurity Twitter (Apr 23, 2024)
- ↑ @0xEverybody Twitter (Apr 23, 2024)
- ↑ ZKasino Bridge (Apr 23, 2024)
- ↑ https://coinmarketcap.com/currencies/ethereum/historical-data/ (Dec 21, 2021)