Crypto Casino CEO Charged with Fraud After Allegedly Squandering $3.8 Million of Investor Funding

NEW YORK – Federal prosecutors have charged Richard Kim, the 39-year-old former CEO of crypto gaming startup Zero Edge, with securities and wire fraud, alleging he diverted millions in investor capital for personal gambling and speculative trading.

According to an indictment unsealed Wednesday by the U.S. Department of Justice, Kim allegedly misappropriated $3.8 million—nearly the entire seed round funding his company secured in June last year.

From Funding to Fallout in Seven Days

Court filings allege that Zero Edge closed a $4.3 million seed round and, within a single week, Kim redirected the majority of the capital for personal use. This included $1 million transferred to his account on Shuffle, a crypto-powered casino and sports betting platform.

When questioned by investors, Kim allegedly offered conflicting explanations:

• To one, he claimed just $710,000 remained, blaming the loss on “day trading.”
• To others, he attributed the shortfall to a failed “treasury management strategy.”

A Spiral of Losses and Deception

Kim, a former executive at JPMorgan, Goldman Sachs, and institutional crypto firm Galaxy Digital, reportedly told CoinDesk last year that “old demons” resurfaced after he lost $80,000 in a phishing attack—triggering a “negative spiral” of leveraged trading, raising new capital, and concealing the truth from backers.

Upon arrest, Kim allegedly admitted to the FBI that he was “clearly wrong from the beginning” and that his actions were “completely unjustifiable.”

FBI Assistant Director Christopher Raia stated:

“Kim allegedly hedged his bets that false assurances would induce more investments and conceal the true nature of his spending.”

Industry Connections and Investor Action

Before founding Zero Edge in 2024, Kim worked at Galaxy Digital as a venture investor. Galaxy, which had taken a small equity stake in Zero Edge, said it joined other investors in alerting authorities once they learned of his actions.

“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,” a Galaxy spokesperson said.

Regulatory Charges and Company Liquidation

The U.S. Securities and Exchange Commission also charged Kim with fraud in May, alleging that he began misappropriating investor funds “within minutes” of receiving them.

Zero Edge, which never launched its platform, is now undergoing liquidation.