Poker Writer
The CEO and founder of the cryptocurrency casino Zero Edge was indicted on Wednesday for misappropriation of investor funds, which he used for personal gambling and trading. The New York field office of the FBI unsealed the indictment and laid out the charges against Richard Kim, who founded the site in March 2024. Kim had raised $4.3 million in capital to fund his project. He resigned after admitting to having lost most of it gambling and speculating.
U.S. Attorney Jay Clayton released a statement about said charges.
As alleged, Richard Kim misled investors by promising that he would build a blockchain-based casino gaming app, but ironically, Kim turned around and gambled away the very funds he said he would use to build a better casino. Founders who abuse the trust of their investors threaten the integrity of our important and uniquely American venture capital market.
Before the venture into the cryptocurrency casino world, Kim’s resume includes stints as an executive at J.P. Morgan and Goldman Sachs.
According to Kim’s investing profile, he had 13 investments on record with a fund size of $325 million including some investments into gaming companies like Bad Robot Games and 1047 Games.
Only $700,000 Of Investment Capital Remained
Kim resigned on July 2, 2024, and Zero Edge has been liquidated since after never even launching. He admitted in emails to Zero Edge shareholders that he had blown $3.7 million in company funds on gambling and cryptocurrency speculation. He said that left only $700,000 of the $4.3 million Zero Edge had raised in seed financing.
Kim had diverted $3.8 million of the funding into his personal Coinbase account and from there into various other cryptocurrency exchanges.
“Kim allegedly hedged his bets with false assurances that he believed would induce more investment and therefore conceal the true nature of his spending,” said FBI Assistant Director in Charge Christopher G. Raia.
Kim explained what happened in an interview with CoinDesk. He said it all began with losing $80,000 to a phishing site in a moment of carelessness.
I really fucked up. I lost this money. It was grossly negligent. But I didn’t intend to go run away with this money. It triggered my old demons, the need to ‘make it back’ to preserve my reputation. … [I] started down a negative spiral of leverage trading, raising more capital, and hiding the truth. … By the seed round’s close, I was ready to rebuild, to start fresh, putting past demons aside. But the moment I received the proceeds, something snapped. I felt compelled to make up for my missteps. Within days, millions were in leveraged longs. When bitcoin crashed, I experienced a complete wipeout.
The penalties for Kim could be severe. He now faces one count of securities fraud and one count of wire fraud. Each could carry a sentence as long as 20 years in prison. A judge will ultimately decide his fate after he gets his day in court.
