Richard Kim Arrested for Allegedly Misappropriating Investor Funds

Richard Kim, the founder of Zero Edge, was arrested for allegedly gambling away nearly $7 million of investors’ funds. The FBI has charged him with fraud after he misappropriated investments by claiming funds were used for other purposes. Kim acknowledged his reckless trading and attempted to rebuild trust by reporting himself to the SEC. His case highlights breaches of trust in the cryptocurrency investment landscape.

Richard Kim, founder of the cryptocurrency casino Zero Edge, has been arrested on charges of securities and wire fraud after reportedly gambling away nearly all of the approximately $7 million raised from investors. Documents from the court reveal that he posted a $250,000 bond in relation to the allegations. The FBI complaint indicates that Kim misrepresented the use of investor funds and diverted significant amounts towards gambling activities.

The allegations stem from Kim’s admissions to having gambled away $3.67 million of investor funds through risky leveraged crypto trades. He noted that a phishing scam that resulted in an $80,000 loss triggered a cycle of reckless trading in an attempt to recover losses. This led to further misappropriation of funds and concealment of his actions from investors.

Kim approached the U.S. Securities and Exchange Commission (SEC) voluntarily to disclose his actions, acknowledging he lost investor money but maintaining that he did not intend to unlawfully appropriate these funds. The FBI’s investigation uncovered inaccuracies in Kim’s statements to investors, particularly regarding the funds’ destinations, including transfers to Shuffle.com, a gambling website.

Before founding Zero Edge, Kim had an esteemed career, holding executive positions at prominent financial institutions including Galaxy Digital, JPMorgan, and Goldman Sachs. Galaxy was among the investors impacted by Kim’s breaches of trust. A spokesperson confirmed that they had reported his conduct after discovering discrepancies in his role at Zero Edge.

Zero Edge was pitched as an innovative crypto casino designed for enhanced transparency for gamblers but never fully materialised. Kim’s vision was influenced by his personal struggles with gambling addiction and dissatisfaction with traditional gambling practices.