Crypto casino founder accused of losing $3.8M in investor funds through gambling

Federal prosecutors in New York have charged Richard Kim, former CEO of the crypto-powered casino startup Zero Edge, with securities and wire fraud for allegedly misappropriating millions of dollars in investor funds and using them for online gambling.

Kim, 39, a former executive at Goldman Sachs, JPMorgan Chase, and Galaxy Digital, is accused of diverting about $3.8 million shortly after Zero Edge closed a $4.3 million seed funding round in June 2024, according to an indictment unsealed in US District Court in Manhattan.

Prosecutors say the funds were transferred to personal accounts, with $1 million allegedly sent to an account at Shuffle, a cryptocurrency casino and sports betting platform.

Alleged losses within one week

Court filings state that most of the investors’ funds were lost within a week through leveraged cryptocurrency trading and gambling.

On June 29, 2024, Kim told some investors in an email that he was “solely responsible for the loss of $3.67 [million] of the company’s balance sheet” and that Zero Edge had lost nearly all of its money. Prosecutors allege he concealed that the losses were tied to personal gambling, instead telling investors they were the result of a “treasury management strategy” or “day trading.”

Zero Edge, incorporated in April 2024 in the Cayman Islands, was intended to develop a blockchain and cryptocurrency-enabled gaming app. The company never launched and entered voluntary liquidation in December 2024.

Statements from authorities

“Richard Kim misled investors by promising that he would build a blockchain-based casino gaming app, but ironically, Kim turned around and gambled away the very funds he said he would use to build a better casino,” Manhattan US Attorney Jay Clayton said in a statement.

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

The Securities and Exchange Commission also brought fraud charges in May 2024, alleging Kim began diverting investor funds “minutes” after they were received.

Past roles and admissions

Kim served as chief operating officer of global foreign exchange and emerging markets trading at Goldman Sachs and JPMorgan before joining Galaxy Digital in 2018 as a venture fund investor. Galaxy invested in Zero Edge.

In a 2024 interview, Kim said “old demons” took over after he lost $80,000 to a phishing attack, which he claimed started “a negative spiral of leverage trading, raising more capital, and hiding the truth.” Following his April 15 arrest, Kim admitted to the FBI that his actions were “clearly wrong from the beginning” and “completely unjustifiable.”

A Galaxy spokesperson said: “Upon learning of certain actions taken by Mr. Kim in his role at Zero Edge, we, along with other investors, reported his conduct to the authorities.”

Kim was released on a $250,000 bond after his arrest. Prosecutors and defense attorneys had discussed a possible resolution before the indictment was issued, but no agreement was reached.