Richard Kim, the founder of Crypto Casino Zero Edge, was arrested on Tuesday following allegations that he had played investors’ funds.
According to a complaint from the FBI filed Tuesday in the South New York district, Kim “has fraudulently prompted investors to invest in Zero Edge, a cryptocurrency technology company he founded, then diverted millions of dollars in these investor funds”.
The FBI said that Kim had lost “almost all” of the $ 7 million he collected from investors and accused him of securities fraud and wire fraud. According to the judicial archives, Kim filed a guaranteed obligation of $ 250,000 and installed $ 100,000 in “cash or real estate” to secure it.
Coindesk was the first to report on Zero Edge’s incident in July of last year. In an interview at the time, Kim revealed in Coindesk that he had played more than $ 3.67 million in investors’ funds thanks to a series of high -risk crypto trades.
“The fall began with an imprudent error – a phishing site that cost $ 80,000,” Kim said in his own memory of what was wrong, that he shared with Coindesk in a written declaration which he later published as public excuses. “It sparked my old demons, the need to” come back “to preserve my reputation.”
According to Kim, he “started a negative spiral of lever trading, raising more capital and hiding the truth”.
After losing most of the $ 7 million he had collected for Zero Edge, Kim told Coindesk that he had reported to the Securities and Exchange Commission of the United States.
“A part of my justification to extend my hand proactively to the dry was to say, ok the guys, I am really in place. I lost this money. It was roughly negligent. But I did not intend to flee with this money,” he told Coindesk in an interview.
According to the FBI complaint, Kim’s previous accounts “described in a erroneous way where investors’ funds had disappeared, and why, and failed to inform investors that certain funds had been transferred to Shuffle.com, the game website.”
Kim’s assertion that he initially lost $ 80,000 for a phishing scam and never “mix[ed] Personal and commercial funds ”, according to the FBI, did not take into account the fact that it had also sent funds of the company to an online sports book and investment accounts in personal crypto.
Kim did not immediately respond to a request for comments this week.
Kim’s arrest marks a striking fall in grace. Former Galaxy executive, the crypto investment company led by Michael Novogratz, Kim also directed elite exchange offices in JPMorgan and Goldman Sachs. Before that, he was a lawyer for the prestigious Cleary Gottlieb lawyer.
Galaxy was one of Zero Edge’s investors who lost money following Kim’s activities.
“Mr. Kim left Galaxy in March 2024 to start Zero Edge, a company in which Galaxy had an intangible balance sheet,” said Michael Wursthorn, head of communications for Galaxy. “By learning certain actions taken by Mr. Kim in his role at Zero Edge, we, with other investors, reported his conduct to the authorities.”
Kim launched Zero Edge as an cryptographic crypto-casseroon that levels players for players thanks to improved transparency.
Zero Edge was never launched, but Kim told Coindesk last year that he was motivated to build him because of his history with the game dependence and his frustration that the house often had an opaque and unfair advantage over players.
Read more: the founder of Crypto Casino apologizes for playing investor funds
