Federal prosecutors in New York are pursuing fraud prices towards the previous CEO of a crypto-powered on line casino, claiming the 39-year-old gambled away buyers’ money.
The U.S. Justice Division just lately charged former Zero Edge CEO Richard Kim with securities and wire fraud for allegedly diverting $3.8 million price of seed spherical funding to himself for private use, based on an indictment unsealed on Wednesday.
Zero Edge closed its $4.3 million seed funding spherical final June, and through a seven-day stretch that month, Kim allegedly misappropriated most of buyers’ funds, with $1 million diverted to a private account at Shuffle, a crypto-powered on line casino and sports activities betting platform.
Kim allegedly informed one investor that the corporate had solely $710,000 left—only one week after Zero Edge’s seed spherical closed—attributing the losses to “day buying and selling.” Different buyers had been allegedly informed the losses had been from Zero Edge’s “treasury administration technique.”
Kim, a former govt at JPMorgan and Goldman Sachs, informed CoinDesk final yr that “outdated demons” took over after he misplaced $80,000 to a phishing assault that began “a unfavourable spiral of leverage buying and selling, elevating extra capital, and hiding the reality.”
Following his arrest, Kim allegedly informed the FBI that he was “clearly incorrect from the start,” and that his conduct amounted to a “fully unjustifiable” betrayal to his buyers.
“Kim allegedly hedged his bets that false assurances would induce extra investments and conceal the true nature of his spending,” FBI Assistant Director Christopher Raia stated in an announcement.
Kim labored at institutional crypto agency Galaxy Digital as a enterprise fund investor earlier than he left to begin Zero Edge, and Galaxy had invested in his agency, court docket paperwork present.
“Richard Kim left Galaxy in March 2024 to begin Zero Edge, an organization during which Galaxy had an immaterial balance-sheet funding,” a Galaxy spokesperson informed Decrypt. “Upon studying of sure actions taken by Mr. Kim in his position at Zero Edge, we, together with different buyers, reported his conduct to the authorities.”
The U.S. Securities and Change Fee charged Kim with fraud in Might, saying in a press launch that he misappropriated investor funds “minutes” after receiving funds. The regulator famous that Zero Edge by no means launched, and the corporate is liquidating.
