Federal prosecutors in New York have charged Richard Kim, the former CEO of Zero Edge Corporation, with securities and wire fraud after he allegedly misused millions of dollars raised from investors. The indictment, unsealed yesterday, accuses Kim of misleading investors about how their funds would be used and then diverting those funds for personal gambling and speculative cryptocurrency trading.
“As alleged, 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 U.S. Attorney Jay Clayton. “Founders who abuse the trust of their investors threaten the integrity of our important and uniquely American venture capital market.”
“Richard Kim allegedly misappropriated millions of investors’ dollars intended to develop his online casino company by redirecting these funds for personal gambling and trading ventures,” said FBI Assistant Director in Charge Christopher G. Raia. “Kim allegedly hedged his bets that false assurances would induce more investments and conceal the true nature of his spending. The FBI remains committed to apprehending any individual who leverages executive positions to defraud others for selfish purposes.”
According to court documents, Kim founded Zero Edge in March 2024 with plans to create an app-based casino using blockchain technology. He told potential backers that their investments would go toward building games such as craps, roulette, baccarat, and blackjack on a blockchain platform. However, prosecutors allege that after raising approximately $4.3 million in seed funding, Kim transferred roughly $3.8 million into a personal cryptocurrency account at Coinbase before moving about $1 million more onto other exchanges including Binance, Kraken, and Backpack.
Between June 21 and June 27, 2024, investigators say Kim transferred about $7 million—and netted transfers totaling approximately $1 million—from Coinbase and Kraken accounts into his personal account at Shuffle.com, which markets itself as a VIP crypto casino and sportsbook. Additional sums were sent to unknown cryptocurrency wallets or withdrawn into checking accounts.
In emails later sent to investors, Kim admitted responsibility for losing nearly all company funds through leveraged trading losses but continued to describe the losses as part of a “treasury management strategy” rather than disclosing they were due to gambling.
At the time of his arrest, authorities report that Kim told the FBI he knew what he did “was clearly wrong from the beginning” and “completely unjustifiable.”
Kim faces one count each of securities fraud and wire fraud; both charges carry maximum sentences of up to 20 years in prison if convicted.
U.S. Attorney Jay Clayton acknowledged the work done by FBI Special Agents on this case as well as assistance from the U.S. Securities and Exchange Commission (SEC), which has filed its own civil action against Kim.
The prosecution is being handled by Assistant U.S. Attorney Ryan T. Nees from the Office’s Securities and Commodities Fraud Task Force.
Officials emphasized that these charges are accusations only; Richard Kim is presumed innocent unless proven guilty in court.
