May 6, 2024 - Economy

🚩 Culture hash: Don't take their word for it

Illustration of a die wearing a burglar mask.

Illustration: Lindsey Bailey/Axios

At this point, when a founder dismisses concerns about their project with the lingo "FUD" (fear, uncertainty and doubt), that's a bad sign, not a good sign.

  • A man associated with a project that, not so long ago, was fond of throwing around "FUD" to dismiss concerns, has been arrested in the Netherlands.

Between the lines: ZKasino, a purported gambling platform, had moved $33 million of users' funds onto Lido, a staking service, with a long lockup.

  • ZKasino billed itself as a new kind of gaming app that used zero-knowledge proofs and EigenLayer technology.
  • Looking at its underlying code, though, the team at Rekt News reports that neither of those things were true.

It had its own blockchain, and it asked users to bridge cryptocurrency from Ethereum to its chain to earn staking rewards in its native token ZKAS.

  • However, users watched in woe as their assets in the bridge moved to Lido instead, where they had no access to them.

Flashback: Blockchain sleuth ZachXBT had warned potential backers about red flags in the project in December.

The bottom line: If a commentator or news organization with no financial interest in a project raises concerns about something, it probably makes sense to at least hear them out.

  • A founder always stands to benefit by dismissing criticism of the thing they made.

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