ZKasino Begins Partial ETH Refunds After $33M Scam

The ZKasino scandal originated in early 2024 during what the platform marketed as a “bridge-to-earn” campaign. More than 10,000 users deposited 10,515 Ethereum (ETH) worth approximately $33 million at the time, with promises they could earn yield and withdraw their principal investment at any time. Instead, on-chain data revealed that the platform converted user deposits into vested ZKAS tokens without consent and staked the ETH on Lido, effectively locking customer funds. The team then fell silent for more than a year, leading to widespread accusations of a classic rug pull scheme in the DeFi space.

Further investigations exposed additional misrepresentations by the ZKasino team, including false claims of $350 million in Series A funding from prominent investors MEXC and Big Brain Holdings. These claims were later debunked, revealing a pattern of deception that extended beyond the initial fund locking. The platform’s complete radio silence for over a year only deepened investor concerns and reinforced the appearance of an orchestrated exit scam targeting crypto gambling enthusiasts.

Dutch authorities took significant action on April 29, 2024, arresting a 26-year-old individual connected to the ZKasino incident. The arrest marked a crucial development in the case, with authorities seizing assets worth over $12 million in cryptocurrency, real estate, and luxury vehicles. This law enforcement intervention appears to have played a role in prompting the recent refund initiative, though the exact connection between the arrest and the partial repayments remains unclear.

The involvement of Dutch authorities highlights the increasing global regulatory scrutiny facing problematic crypto projects, particularly those operating in the gambling and DeFi sectors. The asset seizure of $12 million represents a substantial portion of the total $33 million allegedly misappropriated, though questions remain about the location and recovery of the remaining funds.

In a November 10 post on X, the platform’s anonymous founder, Derivatives Monke, broke the team’s year-long silence to announce that refund processing had begun. The founder stated that approximately 35% of withdrawal requests had been processed, covering roughly 2,500 of the 8,000 affected addresses. Derivatives Monke emphasized the complexity of the refund process due to multiple parties involved and noted that the amounts returned are not necessarily final, with possible interest adjustments still pending.

The founder outlined that while the project aims to make the process simple for most users, Know Your Customer (KYC) procedures and other verification measures will apply to larger withdrawals for legal compliance reasons. A second wave of repayments is expected next week, potentially bringing the total refunded to 75% of affected users. However, the founder’s communication provided limited details about the timeline for full restitution or the methodology for determining refund amounts.

The crypto community on X responded with a mixture of celebration and deep skepticism. Some victims who had lost smaller amounts of ETH confirmed receiving refunds, with user alvarzz noting “Zkasino refunding me was not on my 2025 bingo card,” expressing surprise given the team’s prolonged silence. However, larger depositors questioned when they would see their funds returned, highlighting the disparity in treatment between small and large investors.

Veteran crypto trader Eric Cryptoman raised critical questions about whether private sale investors would recover their ETH, pointing out that the project had retained $25 million beyond the amounts being refunded. He noted that while he didn’t expect refunds based on similar past experiences, he found it remarkable that the team was “still active and behaving as if nothing had happened.” Many community members continue to demand full transparency, including audited proof of remaining funds, clear timelines for complete restitution, and independent oversight of the refund process.

The mixed reactions reflect the broader trust issues plaguing the crypto gambling and DeFi sectors, where rug pulls and exit scams have become increasingly common. While the partial refunds represent a positive development for some victims, the lack of comprehensive information about fund recovery and the project’s checkered history leave many questions unanswered about whether full restitution will ultimately be achieved.