Richard Kim, former CEO of Zero Edge, is accused of embezzling $3.8 million from the seed round to gamble on the Shuffle casino platform.
The federal prosecutor's office in New York has charged Richard Kim, 39, the former CEO of the cryptocurrency casino platform Zero Edge, with securities fraud and wire fraud. According to an indictment released on August 14, Kim is accused of misappropriating $3.8 million from the seed funding for personal use, including gambling on cryptocurrency casino platforms.
Zero Edge completed a $4.3 million seed funding round in June last year, but within seven days of that month, Kim was accused of embezzling most of that money. Notably, $1 million was directly transferred into Kim's personal account at Shuffle, a cryptocurrency casino and sports betting platform.
Just one week after the seed round ended, Kim had to inform an investor that the company only had $710,000 left. To conceal the truth, he blamed the loss on 'day trading' with some investors, while telling others that it was the result of Zero Edge's 'cash management strategy.'
Financial history and confession
Kim, who previously worked at JPMorgan and Goldman Sachs, provided an explanation for his actions in an interview with CoinDesk last year. He stated that 'old demons' returned after losing $80,000 due to a phishing attack, leading to a 'negative spiral' of leveraged trading, raising more funds, and concealing the truth.
After being arrested, Kim is said to have confessed to the FBI that he 'clearly was wrong from the start' and his behavior was a betrayal 'completely unjustifiable' to investors. FBI Assistant Director Christopher Raia noted that Kim had 'bet that false reassurances would lead investors to inject more capital and hide the true nature of the spending.'
Before founding Zero Edge, Kim worked at Galaxy Digital as a venture capital investor, and Galaxy also invested in his company. A spokesperson for Galaxy stated that Kim left the company in March 2024 to establish Zero Edge, and upon learning about his actions in his role at the new company, Galaxy and other investors reported the matter to the authorities.
The U.S. Securities and Exchange Commission (SEC) charged Kim with fraud in May, stating that he embezzled investor money 'just minutes' after receiving the funds. The SEC also noted that Zero Edge never actually became operational and is currently in the process of liquidation.