Richard Kim, the founder of a crypto casino called Zero Edge, was arrested on Tuesday after being accused of losing millions of dollars that investors had given him.
According to a complaint filed by the FBI in the Southern District of New York, Kim fraudulently convinced investors to put money into his company, promising to build a groundbreaking crypto casino that would offer fair and transparent gameplay.
Rather than invest the money in the business, he allegedly lost nearly all of the $7 million he raised on risky crypto trades and gambling on online websites.
Kim has a background in high-profile financial jobs. He once worked at Galaxy Digital, a crypto investment company headed by Michael Novogratz, and was in senior trading jobs at JPMorgan and Goldman Sachs.
He was also once an attorney at the prestigious law firm Cleary Gottlieb. Given his impressive resume, investors trusted him to responsibly manage their funds.
However, things began to unravel after he fell victim to a phishing scam that cost him $80,000. According to Kim, that loss triggered old habits related to his gambling addiction and led him into a spiral of risky behavior.
In interviews last year, Kim admitted to losing at least $3.67 million through high-leverage crypto trades. He said he eventually contacted the U.S. Securities and Exchange Commission (SEC) himself to confess what had happened, insisting that while he was grossly negligent, he didn’t intend to defraud anyone or run off with the money.
Despite claiming he didn’t mean to defraud anyone, the FBI says Richard Kim misled investors about how their money was used. He allegedly sent company funds to gambling sites like Shuffle.com and used some for personal crypto trades. The crypto casino he promised to build, Zero Edge, never launched.
Kim now faces charges of securities fraud and wire fraud. He was released on a $250,000 bond, with $100,000 put up in cash or property. Galaxy Digital, one of the investors, said they didn’t know about his actions at the time and reported him after finding out.
