The former CEO of the technology company Zero Edge Corporation, Richard Kim, has been indicted by a federal grand jury in the United States on charges of securities fraud and telecommunications fraud, announced by the Federal Prosecutor’s Office on August 12. According to the prosecution, Kim promised investors to develop an online casino application based on blockchain technology, but instead diverted millions of dollars from the initial round of funding to high-leverage cryptocurrency trades and online gambling.
Prosecutor Jay Clayton of the Southern District of the United States stated that Kim promised investors to use the funds to create a better casino, but ironically, he squandered the money in real casinos, severely damaging trust and integrity in the venture capital market.
Founded in March 2024, Zero Edge claimed to introduce online gambling games based on blockchain and cryptocurrency technology, starting from dice rolling and expanding to roulette, baccarat, and blackjack. After raising approximately $4.3 million in the first round of funding, Kim transferred around $3.8 million to his personal Coinbase account, then to exchanges like Binance, Kraken, and Backpack, with approximately $1 million going to Shuffle.com, a purported “VIP cryptocurrency casino and sports betting” platform. Another $450,000 flowed into an unidentified wallet, and $145,000 entered his personal checking account.
The prosecution revealed that Kim admitted in emails to investors that the company lost around $3.67 million from leverage trading, but he falsely claimed to some investors that the losses stemmed from a “treasury management strategy” to conceal the fact that the funds were used for personal gambling. When arrested, Kim confessed to the Federal Bureau of Investigation (FBI) that he “knew from the start that this was completely wrong, with no justifiable reason.”
Richard Kim, a 39-year-old Korean-American, previously served as the Chief Operating Officer (COO) of the foreign exchange trading departments at Goldman Sachs and J.P. Morgan before founding Zero Edge. He also worked as a lawyer for Cleary Gottlieb law firm. He faces one count of securities fraud and one count of telecommunications fraud, with a maximum sentence of 20 years each. The case is being investigated by the Securities and Commodities Fraud Task Force of the Southern District of the United States Attorney’s Office, with assistance from the FBI and the Securities and Exchange Commission (SEC).
It is important to note that the charges in the indictment are merely allegations, and Kim is presumed innocent until proven guilty in court.