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Federal prosecutors say Richard Kim, the former head of crypto casino startup Zero Edge, promised investors a blockchain gaming platform — and instead burned through their money at online casinos and high-risk crypto trades.
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The indictment, unsealed in U.S. District Court in Manhattan, accuses Kim of securities and wire fraud. Prosecutors say the 39-year-old former Goldman Sachs, JPMorgan Chase, and Galaxy Digital executive moved investor funds into personal accounts within minutes of the June 2024 funding round closing.
Court filings state that most of the money was gone within a week, lost in leveraged cryptocurrency trading and online gambling. Prosecutors allege that in one transfer alone, $1 million went to an account at Shuffle, a crypto-powered casino and sports betting platform.
On June 29, 2024, Kim emailed investors saying he was “solely responsible for the loss of $3.67 [million] of the company’s balance sheet” and claimed the losses were tied to a “treasury management strategy” or “day trading.” Authorities say the truth — that the money went to gambling — was deliberately concealed.
Zero Edge, incorporated in the Cayman Islands in April 2024, was pitched as a blockchain-based casino gaming app. The product was never launched, and the company voluntarily shut down eight months later.
“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,” said Manhattan U.S. Attorney Jay Clayton.
FBI Assistant Director Christopher Raia added: “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 filed its own fraud charges in May 2024, claiming Kim began diverting funds “minutes” after they were received.
In a 2024 interview, Kim admitted that “old demons” resurfaced after he lost $80,000 to a phishing scam, triggering “a negative spiral of leverage trading, raising more capital, and hiding the truth.”
Following his April 15 arrest, Kim told the FBI his actions were “clearly wrong from the beginning” and “completely unjustifiable.”
A spokesperson for Galaxy Digital, one of Zero Edge’s investors, 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. Prosecutors and defense attorneys discussed a potential resolution before the indictment but failed to reach an agreement.