- A wallet connected to the $40 million ZKasino scam lost $27.1 million after its leveraged ETH position was liquidated during recent market declines.
- The liquidation occurred after ethereum’s price fell to a near two-year low of $1,480, with crypto analytics platform Onchain Lens describing it as “karmic justice.”
- Despite promises to return funds, ZKasino has yet to reimburse affected users almost a year after allegedly transferring $33 million in user ETH to Lido Finance.
A wallet linked to the $40 million ZKasino scam has been liquidated for $27.1 million following Ethereum‘s sharp price decline, according to blockchain analytics platform Onchain Lens. The liquidation occurred on April 7, when ETH reached a near two-year low of $1,480, impacting the scammer’s 20x leveraged position on Hyperliquid.
Onchain Lens described the event as “a scammer gets a dose of karma” in an April 7 post on X. The platform added: “The ZkCasino scammer, who scammed $40M+, closed its $ETH (20x) position on #Hyperliquid, faced a total loss of $27.1M.”
The liquidation came during a period of significant sell-offs in traditional equity markets that triggered a broader crypto market correction. On the same day, another unidentified crypto whale had to make a $14 million emergency deposit to avoid a potential $340 million Ethereum liquidation.
The History of the ZKasino Controversy
ZKasino launched in April 2024, attracting investors by promising an airdrop of its native token (ZKAS) to users who bridged Ether to its platform. Instead of fulfilling these promises, ZKasino allegedly transferred approximately $33 million in user ETH to staking protocol Lido Finance.
Following accusations of running an exit scam, ZKasino announced in a May 28, 2024 Medium post that it was initiating a “2-step bridge back process” to return funds at a 1:1 ratio. However, users who wanted their ETH back would have to forfeit any allocated ZKAS tokens.
Developments and Current Status
Dutch authorities arrested a suspect allegedly connected to the “rug pull” on April 29, 2024. Shortly afterward, all bridged ETH was reportedly returned to the ZKasino multisig wallet, with Derivative Monke publicly denying the rug pull allegations on X.
Despite these developments, affected users report they have not received their funds nearly a year after the incident. One anonymous user told Cointelegraph in August 2024: “Unfortunately, everyone who sent the ZKAS back has not heard anything from them yet.”
The recent liquidation appears to have further diminished the likelihood of affected users recovering their investments, as the wallet associated with the alleged exploit has now lost a significant portion of its assets.
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