On April 15, Richard Kim, the founder of the crypto casino platform Zero Edge, was arrested after being accused of using investor funds for gambling. According to the lawsuit filed by the U.S. Federal Bureau of Investigation (FBI) in the Southern District Court of New York, Kim "defrauded investors by raising Capital for Zero Edge — a cryptocurrency technology company he founded — and then misappropriating millions of dollars from those funds."
The FBI stated that Richard Kim lost "almost all" of the $7 million raised from investors and is now facing charges of securities fraud and electronic funds transfer fraud. Court records reveal that Kim was released on bail after posting a $250,000 bond, of which $100,000 was secured by cash or real assets.
The incident involving Zero Edge was first reported by CoinDesk in July of last year. In an interview with CoinDesk at the time, Richard Kim admitted to gambling and losing more than $3.67 million of investor funds through high-risk leveraged cryptocurrency transactions. Kim said the "collapse began with a careless mistake" when he lost $80,000 by accessing a phishing website. According to Kim's statement to CoinDesk, which was later published as an apology, this incident "triggered old demons in him," leading to an attempt to "recover" and salvage his reputation.
Richard Kim described himself as falling into a "negative spiral" with leveraged trading, continuing to raise Capital and hide the truth from investors. After losing almost all of the $7 million raised for Zero Edge, Kim said he proactively reported his actions through the U.S. Securities and Exchange Commission's (SEC) public whistleblower line. In an interview with CoinDesk, he shared: "One reason I proactively contacted the SEC was to acknowledge that I truly made a serious mistake. I lost this money extremely irresponsibly. But I never intended to flee with the money."
However, according to FBI records, Kim's previous reports had "misled about how and why the investment funds were used" and "did not disclose to investors that part of the money was transferred to Shuffle.com, an online betting website." Additionally, although Kim claimed that personal and company funds were never mixed, the FBI stated that he used company funds to deposit money into an online sports bookmaker and personal cryptocurrency investment accounts.
Richard Kim has not made any public comments about the case as of this week.
Kim's arrest marks a significant downfall in his career. Before founding Zero Edge, Richard Kim was a senior executive at Galaxy Digital, a cryptocurrency investment firm founded by billionaire Michael Novogratz. He also previously led trading departments at JPMorgan and Goldman Sachs — two of Wall Street's largest banks — and was previously a lawyer at the prestigious law firm Cleary Gottlieb.
Notably, Galaxy Digital was also one of the investors that had invested in Zero Edge and suffered losses due to Kim's actions. Galaxy's spokesperson, Michael Wursthorn, said: "Mr. Kim left Galaxy in March 2024 to establish Zero Edge — a company in which Galaxy only invested a small value on its balance sheet. After discovering some of Mr. Kim's actions at Zero Edge, we and other investors reported the matter to the authorities."
Zero Edge was once promoted by Richard Kim as the first crypto casino applying transparent technology to balance the advantage between the house and players. However, this project was never officially launched. In an interview with CoinDesk last year, Kim admitted that he was motivated to build Zero Edge because of his personal history of gambling addiction and a desire to address the unfairness he perceived in traditional casinos.
