Crypto Casino CEO Using Investor Funds To Fuel Gambling Addiction

Federal prosecutors in New York have charged Richard Kim, former CEO of the crypto-powered casino startup Zero Edge, with securities and wire fraud, alleging he misappropriated millions in seed funding and gambled it away instead of building the company.

According to an indictment unsealed Wednesday, Kim, 39, diverted $3.8 million of the $4.3 million raised in Zero Edge’s seed round last June for personal use. Within just seven days of the funding round closing, prosecutors say $1 million was transferred into Kim’s personal account at Shuffle, a crypto casino and sports betting platform.

Conflicting Explanations for Missing Funds

Prosecutors allege Kim provided contradictory accounts to investors about the missing money. One investor was told the company’s losses were due to day trading, while others were told the funds had been lost through poor “treasury management strategies.”

In an interview with CoinDesk last year, Kim admitted that “old demons” resurfaced after he lost $80,000 in a phishing attack, sparking what he described as “a negative spiral of leverage trading, raising more capital, and hiding the truth.”

Following his arrest, Kim allegedly told the FBI he knew he was “clearly wrong from the beginning” and described his actions as a “completely unjustifiable” betrayal of investor trust.

Pattern of Concealment

FBI Assistant Director Christopher Raia said Kim “hedged his bets that false assurances would induce more investments and conceal the true nature of his spending.”

Before founding Zero Edge in March 2024, Kim worked as a venture fund investor at institutional crypto firm Galaxy Digital. Galaxy, which made a small investment in Zero Edge, said in a statement that it reported Kim’s actions to authorities after becoming aware of the allegations.

The U.S. Securities and Exchange Commission also filed fraud charges against Kim in May, alleging he began misappropriating investor funds “minutes” after receiving them.

Regulators noted that Zero Edge never launched and is currently in the process of liquidation.