Sounds like you used gzip to zip it. Gzip is different from zip (which Moodle uses). You should use the command line 'zip' command (or your choice of desktop application) to zip files, not gzip.
I suppose you could specify gzip and gunzip but I've never heard of anybody doing that and, as you say, it would render it incompatible with (the common) zip format.
General help
zipping and unzipping files. Native methods?
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