Ethereum
Gemholic disappears after withdrawing $3.5 million in locked ETH
The crypto community is sounding the alarm over a potential $3.5 million rug pull by Gemholic, a project on zkSync. On June 7, several transactions depleted the project’s smart contract funds.
Concerned members of social media platform X (formerly Twitter) have pointed out that Gemholic’s online presence has disappeared. The project’s X handle and Telegram channel were removed at the time of publication.
How did the Gemholic Rugpull happen?
Last year, Gemholic lost access to 921 ETH collected in a token sale due to a bug in its smart contract. At the time, the team promised to reimburse investors if the blocked funds were recovered.
On June 7, the program supported by Matter Labs Ethereum Layer 2 Network zkSync has completed its v24 upgrade. The update fixed the smart contract issue, allowing access to Gemholic’s escrow funds. However, according to on-chain data, instead of returning the funds to investors, the Gemholic team withdrew 921 ETH and transferred them to the Ethereum blockchain.
Learn more: Identifying and exploring risks on DeFi lending protocols
The Gemholic smart contract. Source: ZKsync Explorer
0xMorgosh, the pseudonymous founder of Zkmarkets, called the action a “rugpull,” accusing Gemholic of misleading investors for a year with false promises of repayment. He pointed out that the Gemholic team carried out Know Your Customer (KYC) verification with SolidProof, which has not publicly addressed the situation.
“A KYC provider must either admit incompetence to carry out thorough checks or take action by reporting fraudsters to authorities and making a public statement. If SolidProof continues to ignore this issue, then its platform is useless and should be discredited,” he said. added.
0xMorgosh also noted that Binance allegedly funded the contract creator address and urged the community to share ideas on how the exchange could help.
Learn more: What is ZKSync?
Meanwhile, this incident is reminiscent a similar case involving ZKasinoanother platform powered by ZK battery. ZKasino did not keep its promise to return bridged Ethereum to users, sparking strong resistance from the crypto community. The project will be later reconsider his fraudulent activities After Dutch authorities have made arrests and opened investigations in the question.
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