Vitalik Buterin, a co-founder of Ethereum, has addressed vital issues around ZKasino fraud. He also addressed the incorrect use of the term “Zero-knowledge” (ZK) in connection with a major fraud. The scandal involved about $33 million worth of Ethereum (ETH) lost to the platform’s fraudulent actions.
ZKasino Accused of Misusing Ethereum in Lido
ZKasino claimed to offer blockchain gambling but failed to deliver on its promises. On April 21, community members sounded the alarms after noticing the deletion of a refund promise concerning more than 10,500 bridged Ethereum used in token farming. Further investigations revealed that ZKasino had funneled this money into Lido, a liquid staking protocol on Ethereum.
In their defense, the ZKasino team says that they changed the bridged ETH to ZKAS tokens at a $0.055 discounted rate and enforced a 15-month vesting period. This announcement, however, was met with huge criticism from the crypto community.
Vitalik Buterin Criticizes Misuse of Crypto Buzzwords
One noted crypto sleuth, ZachXBT, unmasked the notorious past of ZKasino founder Ildar Elham. Elham was charged with defaulting on debts and ducking bet payments. He is also suspected of not paying for an internal phishing attack. Cygaar, another crypto developer, observed that the ZKasino blockchain did not utilize zero-knowledge technology. He insisted that it was nothing but an Arbitrum nitro chain, built in two minutes only.
After these revelations, many investors and crypto platforms disassociated themselves with ZKasino. MEXC, one of the top digital asset exchanges, delisted the ZKAS coin. It had already backed the platform during its Series A financing.
Big Brain, a venture capital firm, publicly stated that the ZKasino app is clearly fraudulent. They made their position clear by saying that they did not invest and that they would refuse to accept any tokens in the future. This declaration is an example of a wider industry response aiming to minimize risks connected with similar blockchain projects.
Vitalik Buterin critique suggests the challenges faced by the crypto sector concerning the usage of buzzwords such as “Zero-Knowledge”. It also indicates that greater attention and openness should be paid to blockchain-related initiatives. With the community and regulators trying to strengthen controls, the result is that such events will occur less frequently.
Read Also: US President Biden Enacts TikTok Ban: ByteDance Given One-Year Ultimatum
Read More: Ethereum Co-founder Vitalik Buterin Criticizes Misuse of “ZK” in ZKasino Scandal