ZKasino Scammer’s $27M Loss Tied to Ethereum Decline
A wallet associated with the $40 million ZKasino scam has lost over $27 million following the liquidation of a leveraged position, a development some in the crypto community are describing as karmic retribution.
Launched in April 2024, ZKasino attracted investors by promising an airdrop of its native token in exchange for bridging Ether to the platform.
However, instead of honoring this commitment, the platform diverted approximately $33 million in user ETH to the staking protocol Lido Finance.
Nearly a year later, the wallet responsible for this alleged exploitation was liquidated for $27.1 million as Ethereum's price plummeted.
Blockchain analytics firm Onchain Lens reports that the liquidation occurred amidst a broader market downturn, triggered by record sell-offs in traditional equity markets, which drove ETH to a nearly two-year low of $1,480—its lowest point since May 2023.
It has since rebounded to $1,585.37, a 2.44% increase in the last 24 hours, but still a 14% decline in the last seven days, according to CoinMarketCap.
This event follows a separate incident earlier on 7 April, in which an unidentified crypto whale was forced to deposit $14 million to prevent a massive $340 million Ether liquidation.
Despite the liquidation, affected users remain without any indication of recovering their lost funds.
Unveiling the ZKasino Exit Scam
In response to accusations of orchestrating an exit scam, ZKasino announced a 72-hour process to return investor funds, one month after transferring $30 million in user assets to Lido.
The platform revealed its intentions in a 28 May 2024, Medium post, asserting that the team has not abandoned the project:
“We are now initiating the 2-step bridge back process in which bridgers can sign up and bridge back their ETH at a 1:1 ratio.”
However, ZKasino made it clear that investors seeking the return of their Ether would forfeit any allocated ZKAS tokens, as well as the remaining 14 months of ZKAS releases.
On 29 April 2024, Dutch authorities arrested one individual believed to be involved in the alleged “rug pull.”
Shortly after, the bridged ETH was returned to ZKasino’s multisig wallet, while Derivative Monke publicly denied the scam accusations on X (formerly known as Twitter).
Despite these developments, ZKasino has yet to return the ETH to investors, nearly a year after the incident.
An user, who declined to reveal his identity not be revealed, commented:
“Unfortunately, everyone who sent the ZKAS back has not heard anything from them yet.”