Richard Kim, the founder of Crypto Casino Zero Edge, was arrested on Tuesday after the accusations that he had played investors’ funds.
According to a FBI complaint filed on Tuesday in the South District of New York, Kim “fraudulently induced investors to invest in Zero Edge, a cryptocurrency technology company that he founded, and then embezzled millions of dollars in the funds of those investors.”
The FBI said that Kim lost “almost all” of the funds of his investors and accused him of fraud of values and electronic fraud. According to judicial records, Kim registered a safe $ 250,000 bonus and put $ 100,000 in “cash or real estate” to ensure it.
COINDESK was the first to inform about the zero coverage incident in July last year. In an interview at that time, Kim revealed to Coindesk that he had played more than $ 3.67 million of the funds of his investors through a series of high -risk crypto trades.
“The fall began with a careless error: a phishing site that cost $ 80k,” Kim said in his own memory of what went wrong, who shared with Coindesk in a written statement that later published as a public apology. “This triggered my old demons, the need to” return “to preserve my reputation.”
According to Kim, “a negative spiral of trade leverage began, raising more capital and hiding the truth.”
After losing most of the $ 7 million he had raised for Zero Edge, Kim told Coindesk that the Public Councils of the US Securities and Securities Commission was informed.
“Part of my justification to proactively arrive at the sec it was to say that, OK guys, they really put me. I lost this money. It was very negligent. But I did not intend to go fleeing with this money,” he told Coindeesk in an interview.
According to the FBI complaint, Kim’s previous accounts “deceptively described where the investors’ funds had gone, and why, and omitted to inform investors that certain funds had been transferred to Shuffle.com, the gambling website.”
Kim’s statement that initially lost $ 80,000 for a Phishing scam, according to the FBI, brushed the fact that he had already sent funds from the company to an online sports notebook and personal cryptocurrency investment accounts.
Kim did not immediately respond to a comment request this week.
Kim’s arrest marks a surprising fall of grace. A former Galaxy executive, the cryptographic investment firm headed by Michael Novograph, Kim also led commercial elite desks in JPMorgan and Goldman Sachs. Before that, he was a lawyer for the prestigious law firm Cleary Gottlieb.
Galaxy was one of the investors in Zero Edge who lost money as a result of Kim’s activities.
“Mr. Kim left Galaxy in March 2024 to start Zero Edge, a company where Galaxy had an investment in immaterial balancing,” said Michael WurstHorn, head of communications from Galaxy. “Upon learning of certain actions taken by Mr. Kim in his role in Zero Edge, we, along with other investors, inform the behavior to the authorities.”
Kim launched Zero Edge as a cryptographic casino of the first type of type that would level the players playing field through greater transparency.
Zero Edge never launched himself, but Kim told Coendesk last year that he was motivated to build it due to his history with the addiction to the game and his frustration that the house often had an opaque and unfair advantage over the players.
Read more: the founder of Crypto Casino apologizes for playing investor funds
