- ZKasino gives users a 72-hour window until May 31 to reclaim over $40 million amid fraud allegations.
- Dutch authorities’ arrest linked to ZKasino pressures the project to return funds and allow user withdrawals.
- Incident highlights crypto’s need for regulatory oversight and transparency to protect investor interests.
ZKasino, a crypto gambling project, has given users until Friday to withdraw funds after allegations of a $33 million rug pull. Users have a 72-hour window until 2pm UTC on May 31 to reclaim their assets, now valued at over $40 million.
The controversy started on April 20 when ZKasino announced the conversion of ETH deposits into its ZKAS token for a bridge-to-earn rewards program. Despite previous promises of 1:1 withdrawals, the project transferred 10,515 ETH to a multisig address controlled by the team. Subsequently, the funds were moved to three wallets in Lido’s wrapped staked Ether token (wstETH).
This decision to allow withdrawals follows significant legal developments. Dutch authorities arrested a 26-year-old man linked to ZKasino on charges of fraud, embezzlement, and money laundering. Moreover, authorities seized assets worth over €11.4 million ($12.4 million). This legal intervention seemingly pressured ZKasino’s team to return the funds to the project’s multisig address on May 9.
On the same day, ZKasino’s pseudonymous representative, Derivatives Monke, took to X platform to deny the rug pull accusations. He labeled them as “completely false and damaging to the ZKasino brand.” He assured users that the “ETH is safe and secured by ZKasino in the ZKasino Multisig,” but did not clarify why the funds were initially moved.
Besides the legal issues, the incident has raised significant concerns within the crypto community. Consequently, trust in the project’s management has been severely shaken. Many users are skeptical about the project’s future. Additionally, the lack of transparency regarding the funds’ initial movement has only fueled these suspicions.
However, ZKasino’s recent move to allow withdrawals could signal a step towards rebuilding trust. This process involves a two-step procedure that users must complete to reclaim their funds. Significantly, the funds’ value has increased from $33 million to over $40 million, providing some relief to affected users.
Moreover, this incident highlights the importance of regulatory oversight in the crypto space. It also underscores the need for projects to maintain transparency and honor their commitments to users. As the crypto industry grows, such cases may prompt stricter regulations to protect investors.
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