Addressing ZKasino Fraud: Vitalik Buterin’s Critique and Industry Response

Vitalik Buterin, a co-founder of Ethereum, has recently spoken out about the misuse of the term “Zero-knowledge” (ZK) in connection with a major fraud involving ZKasino. The scandal, which saw approximately $33 million worth of Ethereum (ETH) lost to the platform’s fraudulent actions, has sent shockwaves through the crypto community.

ZKasino, a blockchain gambling platform, came under fire after community members discovered the deletion of a refund promise involving over 10,500 bridged Ethereum used in token farming. It was later revealed that the funds had been funneled into Lido, a liquid staking protocol on Ethereum. The ZKasino team defended their actions by claiming they had converted the bridged ETH to ZKAS tokens at a discounted rate and imposed a 15-month vesting period. However, this explanation was met with widespread criticism.

The founder of ZKasino, Ildar Elham, has a questionable past, with allegations of defaulting on debts and failing to pay bet winnings. Additionally, it was revealed that the ZKasino blockchain did not actually utilize zero-knowledge technology as claimed, but was instead an Arbitrum nitro chain hastily built in just two minutes.

In response to these revelations, many investors and crypto platforms have distanced themselves from ZKasino. MEXC, a top digital asset exchange, delisted the ZKAS coin, and Big Brain, a venture capital firm, publicly denounced the platform as fraudulent and stated they would not accept any tokens in the future.

Vitalik Buterin’s criticism highlights the challenges faced by the crypto industry in ensuring transparency and accuracy in the use of buzzwords like “Zero-knowledge.” As the community and regulators work to strengthen controls, it is hoped that events like the ZKasino fraud will become less common.