FIOD Arrests Suspect in ZKasino Crypto Gambling Platform Scam

Article by : Milena Petrovska May 9, 2024

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The Netherlands’ Fiscal Information and Investigation Service (FIOD) has confirmed that it arrested a 26-year-old man in connection with the illegal gambling site ZKasino. Dutch authorities suspect the man of fraud, money laundering, and embezzlement.

In a house raid, law enforcers seized real estate assets, a luxury car, and cryptocurrencies worth around EUR 11.4 million (about USD 12.25 million). The investigation has uncovered that ZKasino scammed victims worldwide, and the total illegal amount that it managed to attain as a profit was over $30 million.

Information from FIOD and reports on social media platform X led to the investigation’s start on April 25. The arrest was made four days later, on April 29. FIOD worked with Financial Crime Compliance and the crypto exchange Binance.

Both of these entities helped in securing millions of dollars in digital assets.

FIOD Encourages All Victims to Reach Out

FIOD’s investigation team has been conducting online financial investigations in a joint effort with the Office of the Public Prosecutor. In doing so, it has reached out to the victims of the ZKasino scam.

More precisely, the FIOD released an official statement in which it says that “more arrests are not ruled out” and that to return the money to the victims, they need to be willing to cooperate. That’s why FIOD encouraged everyone who was part of this unfortunate event to step out and contact them.

The exact notice on the FIOD’s website states: ”If you have been a victim of this scam and would like to contact the FIOD, you can do so at fiod.beccar@belastingdienst.nl”.

The agency stated that it would do everything it could to “return the millions that were deposited by the victims.”

The Scam Was Likely a “Rug Pull”

Authorities classified this scam as a possible rug pull. A rug pull involves developers creating a project in which they own a high percentage of the tokens.

They suddenly dump the tokens by selling them all at once, which leads to a drop in the value of the shares (in this case, the tokens). Investors still have tokens in their accounts, but their worth is little to none, whereas the developers have exchanged their tokens for a considerable price.

ZKasino guaranteed investors that they would get their money back within 30 days. However, that didn’t happen. According to the details of the investigation, the smart contracts were set so that returns weren’t possible.

ZKasino Scam Summarized

ZKasino presented itself as a gambling venue based on blockchain technology. It attracted investors from all over the world and invited them to invest. The venue guaranteed that they would receive their investments back within 30 days, which didn’t happen as we know now.

The platform launched on April 20, and it attracted over 10,000 investors. In total, they invested around 10,515 ETH. An on-chain transaction on the same day revealed that ZKasino transferred all funds to the Lido staking protocol.

This move, along with the fact that the platform changed details on its website, caused the investors to be concerned about their money. One of the changes in the platform was a statement that assured investors that they would get their money back.

Then, ZKasino posted on X that it successfully closed a $350 million Series A investment. It listed Big Brain Holdings (venture firm) and MEXC (crypto exchange) as supporters. However, Big Brain Holdings denied any involvement with the venture.

The company noted that some of the founders of a previous project called Zig Zag Exchange are now part of ZKasino. Big Brain Holdings said that it didn’t invest in ZKasino and that the platform “appears to be fraudulent.”

The story unraveled infamously, and it remains to be seen if the Dutch authorities will arrest more people.