Angry investors say ZKasino stole $30m in crypto as Dutch police make arrest linked to scam
An explosive Dutch arrest and asset seizure adds a new twist in a controversy over ZKasino, a crypto gambling platform, which vanished with some $30 million in user deposits last month.
Angry investors say the Friday announcement that Dutch authorities made an arrest of a 26-year-old man linked to ZKasino means they’re a step closer to getting their money back and getting justice.
“It shows the system works and that these muppets cannot get away with it,” a user posting under the name bingojack said via Telegram.
A victims chat group was set up last month by those saying they lost money on ZKasino.
Amid the drama, DL News may have found the real identity of the pseudonymous founder of ZKasino along with raising questions about how the DeFi project got its funding.
The arrest
“The FIOD arrested a 26-year-old man who is suspected of fraud, embezzlement and money laundering,” FIOD Belastingdienst, a Dutch agency that combats financial fraud, said in a statement.
“The investigation focuses on a large-scale scam surrounding the alleged gambling platform ZKasino,” the agency said, adding that more than $30 million in crypto had been invested by victims.
In addition to the arrest, Dutch authorities said they had seized €11.4 million worth of various assets, including real estate, a luxury car, and various cryptocurrencies.
The agency did not respond to a DL News request for further comment.
Who are ZKasino’s founders?
It is not clear who Dutch authorities arrested in connection with the missing millions.
Legal documents viewed by DL News show Elham Nourzai, a 26-year-old Dutch national known online under the pseudonym Derivatives Monke, was the main figure behind ZKasino.
A ZKasino investor who corresponded with Derivatives Monke before investing told DL News they received contracts signed by someone called Elham Nourzai.
A scan of a passport shared with DL News belonging to someone called Elham Nourzai shows that he is a Dutch national. The date of birth on Nourzai’s passport makes him 26 years old.
A signature on ZigZag Capital Ltd’s Register of Directors document seen by DL News matches the signature on Elham Nourzai’s passport.
Photos posted by Derivatives Monke of himself on X show someone who looks similar to Elham Nourzai’s passport photo.
‘A favour to our users’
On March 17, ZKasino and its founders announced a programme called Bridge-to-Earn, offering users a chance to lock up their Ether and earn rewards.
But when it came time to redeem a month later, investors say ZKasino suddenly changed the rules.
“We have made changes from our initial plan,” the project on April 20 said. Users’ Ether will now be swapped out for ZKAS — a new token that ZKasino created.
“This conversion was done as a favour to our users who have bridged to participate in the ecosystem.”
The switch brought on a huge outcry.
Depositors were unable to redeem their Ether in full as advertised, meaning, in effect, ZKasino simply kept their funds.
Onchain records show ZKasino has since converted users’ Ether to Lido’s Wrapped Staked Ether, so that ZKasino, not users, are earning staking rewards.
ZKasino has not responded to the situation publicly, and did not respond to DL News’ request for comment.
‘Really good conditions’
Defizard, a pseudonymous crypto trader, says he invested $24,000 on ZKasino.
“There were really good conditions” on the form for investors, he told DL News. The price per token offered to him was three times lower than the price that ZKasino planned to later sell tokens to the public for.
Defizard bought ZKasino’s ZKAS token privately before it launched at a favourable rate. He worries his investment is now worthless.
Not everyone was convinced.
BlackDragon, a decentralised fundraising group, had considered investing members’ $250,000 in ZKasino, but decided against it.
BlackDragon CEO Domagoj Zdilar said the ZKasino founders mocked him in text messages when he requested they reveal their identities before he invested.
“The way these guys conducted themselves while doing our due diligence” made him think again, he told DL News.
Funding questions
On March 19, ZKasino announced that it had closed a Series A funding round that put its valuation at $350 million. While it didn’t disclose the amount raised, ZKasino listed venture firms MEXC Ventures and Big Brain Holdings among the investors.
But Big Brain Holdings told DL News that it “never invested in ZKasino.”
MEXC ventures did not respond to DL News’ request for comment.
ZigZag Exchange
ZKasino’s founders were previously involved in a separate project, a decentralised exchange on the zkSync blockchain called ZigZag Exchange.
According to a ZigZag X post on March 23, ZigZag raised $15 million, which went into addresses controlled by the ZKasino founders. The wallets were multi-signature wallets, meaning that they needed multiple parties to sign off on transactions.
ZigZag alleged in its post that the ZKasino founders stole the funds from the ZigZag treasury.
“They would claim they were taking money out to pay devs for building the ZigZag front-end, then use parts of the money to build out ZKasino,” the ZigZag post claimed.
“You are an envious loser,” Derivatives Monke, likely to be Nourzai himself, said in response, accusing ZigZag of instead losing all the money in trades gone wrong. “You gave up on ZigZag after raising when our whole team kept pushing you on a daily basis to get things moving.”
DL News attempted to reach the person posting from the ZigZag X account to elaborate on the allegations but was unsuccessful. Nourzai, likely the person behind the Derivatives Monke account, did not respond to a request for comment on the allegations.
Investors seek recourse
Dozens of ZKasino depositors are seeking ways to get their money back. But previous clawback attempts from crypto projects have had limited success.
Victims of the $530 million theft on the Waves blockchain in 2022 have yet to receive recourse.
Many investors in crypto yield platform Finblox, who had their deposits forcibly converted into newly created tokens — a similar situation to ZKasino — are also still out of pocket.
ZKasino depositors hope to buck this trend.
Dutch authorities making an arrest in connection with ZKasino could be a breakthrough in recovering the funds.
‘I should’ve dug deeper’
“I should’ve dug a little deeper, but I’ve done many coin launches and have done pretty well with them,” Dylan Grover, an investor who deposited around $7,500 to ZKasino, told DL News.
Grover is not alone. Thousands of wallets, presumably belonging to individual investors, locked up their Ether on ZKasino with expectation they would be able to withdraw it.
“I have demanded recompensation … but no recompensation has arrived,” wrote the ZigZag poster. “Token holders should attempt to get restitution on their own now.”
Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at [email protected].
