Richard Kim, formerly a top banker at JPMorgan Chase and Goldman Sachs, was indicted on securities and wire fraud charges for allegedly diverting nearly $4 million in investor funds from his casino startup to finance his personal gambling and cryptocurrency trades.
Kim, a 39-year-old New York resident who founded cryptocurrency gaming startup Zero Edge in March 2024 and served as its chief executive, allegedly told investors their money would be used to build an app-based casino and its technology, according to an indictment unsealed this week.
However, in June of that year, shortly after closing a $4.3 million seed financing round, Kim allegedly diverted around $3.8 million into personal crypto accounts and then sent funds to various exchanges and an online crypto casino, the indictment says.
A judge strikes a gavel. (iStock / iStock)
"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," U.S. Attorney Jay Clayton said in a statement.
"Founders who abuse the trust of their investors threaten the integrity of our important and uniquely American venture capital market."
A photo illustration of online gambling. (iStock / iStock)
He allegedly moved around $7 million through various accounts, including personal crypto wallets, and continued seeking additional investments even after he had started trading with existing investors’ money, the indictment adds.
Over the course of just a few days, he allegedly lost the investors' funds, admitting in an email to investors that he was "solely responsible for the loss of $3.67m of the Company’s balance sheet," according to the indictment.
Bitcoin, Ethereum and DogeCoin cryptocurrency (Reuters/Dado Ruvic/File Photo / Reuters Photos)
After his arrest, Kim told the FBI he had concealed information from investors, adding he knew his actions were "clearly wrong from the beginning" and "completely unjustifiable."
Kim was charged with one count of securities fraud and one count of wire fraud, each charge punishable by up to 20 years in prison.
The U.S. Attorney's Office for the Southern District of New York did not immediately respond to FOX Business' request for comment.