Binance’s Investigations team aids in arrest of ZKasino scam suspect

Binance, the top global crypto exchange has played a key role in assiting law enforcement to the arrest of the ZKasino scam suspect.

The widespread community outcry spurred Binance’s Crime Compliance and Investigations team to investigate the fraudulent gambling platform.

The researchers employed a combination of on-chain tracking and open-source intelligence information (OSINT) approaches to track the attacker, the Binance investigations team said in a statement:

“We’ve looked into all the smart contracts for ZKasino, in a type of behavioral network study, to find out who was behind the contract, but also who were the signers behind those addresses.”

After identifying the suspect behind the smart contracts, Binance notified law enforcement of the account holder who perpetrated the scam.

The Fiscal Information and Investigation Service (FIOD) arrested the 26-year-old suspect on April 29 and seized digital assets, real estate, and a luxury car worth $12.2 million, according to a FIOD report dated May 3.

This is the first arrest in the ZKasino fraud case, which saw investors lose at least $33 million in digital assets. Per the April 29 FIOD report:

“ZKcasino presented itself as a gambling platform and blockchain casino. Investors were led to believe that they would get their investments back within 30 days.”

However, Dutch authorities believe the smart contract suggests the site never intended to return the funds.

Binance successfully froze millions of dollars in cryptocurrency stolen via the ZKasino rug pull after law enforcement secured a warrant against the attacker’s accounts.

The Binance investigations team has also helped Dutch authorities with on-chain forensics, identifying the flow of funds and understanding how the fraudulent ZKasino smart contracts were set up.

The Zkasino rug pull, commonly known as an exit scam, netted at least 10,515 Ether from over 10,000 investors before the smart contract deployer began silently siphoning off user assets. The project team also closed the Telegram channel and blocked the withdrawal of funds.

According to Etherscan data, over $32 million in user assets were transferred to another address before being given to the Lido Finance liquid staking protocol.

In connection with the incident, the MEXC crypto exchange canceled the listing of the native token of the ZKAS project, and the Ape Terminal platform canceled the initial coin offering. VC firm Big Brain Holdings has also distanced itself from ZKasino and claims it had never invested directly in this crypto casino.

Binance’s investigation team said the community played a crucial part in apprehending the ZKasino suspect and revealing his identity.

Crypto investors, including prominent crypto analyst FatMan, suspect that Derivatives Ape, a pseudonymous ZKasino builder, was the mastermind behind the scam.

Despite the arrest, the funds have continued to move on-chain, implying that more than one attacker was involved in the rug pull.

Binance’s Investigations team will work closely with relevant authorities to ensure that stolen funds are refunded to investors. This is an ongoing investigation, and according to the FIOD, “more arrests are not ruled out.”

Earlier in May, Binance also assisted Indian authorities in disrupting a fraudulent investment scheme under the guise of a gaming platform, which also led to clawing back millions of dollars worth of assets.