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Richard Kim, a former executive at JPMorgan and Goldman Sachs, told the FBI he knew he “was clearly wrong from the beginning" at the time of his arrest.
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An indictment was unsealed against former Zero Edge CEO Richard Kim on Wednesday.
He allegedly admitted to gambling away the crypto casino firm’s seed round funding.
Federal prosecutors say he misappropriated $3.8 million.
Zero Edge closed its $4.3 million seed funding round last June, and during a seven-day stretch that month, Kim allegedly misappropriated most of investors’ funds, with $1 million diverted to a personal account at Shuffle, a crypto-powered casino and sports betting platform.
Kim told CoinDesk last year that “old demons” took over after he lost $80,000 to a phishing attack that started “a negative spiral of leverage trading, raising more capital, and hiding the truth.”
The Zero Edge crypto casino began to fall apart back in February with Kim accused of "reckless gambling". The gambling site entered into voluntary liquidation.
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Per Let's Talk Bitcon:
The downfall of Zero Edge began with a phishing scam that cost Kim an initial $80,000. In a candid interview with CoinDesk, Kim explained, “This triggered my old demons, the need to ‘make it back’ to preserve my reputation.” Despite his intentions to rebuild, Kim’s resolve crumbled as he received the seed round proceeds. “By the seed round’s close, I was ready to rebuild, to start fresh, putting past demons aside. But the moment I received the proceeds, something snapped,” he confessed.
Kim’s attempt to recover the initial loss led him to engage in high-risk bets using borrowed money in cryptocurrency markets, known as leveraged crypto bets. These risky maneuvers resulted in a staggering loss of approximately $3.67 million, leading to his resignation on July 2, 2024. A phishing scam is a type of fraudulent attempt to obtain sensitive information by disguising as a trustworthy entity in digital communication, which in this case tricked Kim into losing the initial funds.
- Chris Costigan, Gambling911.com Publisher
