ZKasino to repay users amid scam allegations and Dutch probe

Web3 gambling platform ZKasino, which is currently under investigation by Dutch authorities over scam allegations, said its users can now bridge back their ETH at a 1:1 ratio. These funds had been inaccessible for nearly two months.

ZKasino was initially promoted as a decentralized gambling network. However, allegations arose when the platform altered its token redemption policies at the time of its launch, effectively blocking investors from reclaiming their bridged ether tokens—a reversal from what was initially promised.

The sudden policy change affected over 10,000 investors who collectively bridged more than $33 million into the platform, leading to widespread accusations that ZKasino was conducting a rug pull scam.

Earlier this month, Dutch authorities arrested ZKasino CEO on charges of fraud, embezzlement, and money laundering, according to the Fiscal Information and Investigation Service of the Netherlands (FIOD).

As part of the operation, law enforcement carried out a search of the suspect’s residence, seizing both physical and digital records, as well as assets amounting to approximately 11.4 million euros ($12.2 million). These assets comprised real estate holdings and a range of cryptocurrencies.

The FIOD’s statement elaborated that investors were initially assured they could retrieve their investments within 30 days. However, the setup of the smart contract on the blockchain indicated that returning the funds was never intended, a typical indicator of a rug pull scheme.

Now, these investors, referred to as “bridgers,” have been given a limited 72-hour window — from May 28 at 14:00 UTC to May 31 at 14:00 UTC — to register for the reclaim process. The registration requires users to deposit their first received batch of ZKAS bridge rewards back to the platform, forfeiting any future releases of ZKAS tokens scheduled over the next 14 months.

The reclaim process is restricted to the original ETH deposit addresses used to receive the ZKAS bridge rewards. Participants must connect to the ZKasino network via its website, which will automatically verify the original deposit address. During this process, users must deposit their full balance of ZKAS tokens from these addresses, with allowances made for transaction gas fees.

The platform’s founder, Ildar Elham, also known as Derivatives Ape, has a controversial history, having been involved in previous failed crypto projects such as ZigZagExchange and Syncus. This background continues to raise concerns about ZKasino’s operations and the validity of its latest claims.

The Netherlands, a member of the European Union, is part of a trading bloc that recently passed the Markets in Crypto Asset (MiCA) legislation. This EU-wide regulation allows companies to obtain a single license in one EU country and then operate across the entire union.