UK
The founder of a cryptocurrency casino has been officially charged with fraud by the Securities and Exchange Commission (SEC) after misusing $3.77 million of investor funds on his personal gambling addiction and unsuccessful crypto trades.
Richard Kim, the creator of the cryptocurrency casino Zero Edge, is confronted with “permanent injunctions, conduct-based injunctions, disgorgement of ill-gotten profits with prejudgment interest, civil penalties, and an officer-and-director bar” by the SEC. In connection with the commission’s actions against Kim, the U.S. Attorney’s Office for the Southern District of New York revealed a criminal complaint against him on April 15.
The SEC observes that in June 2024, just minutes after obtaining funds from investors, Kim transferred that money to personal gambling and cryptocurrency investment accounts, in addition to a personal bank account.
"He allegedly diverted more than $2.6 million of investor funds to his personal crypto asset futures trading account and lost nearly all of those funds trading crypto asset futures,” according to the SEC. “He also diverted more than $700,000 to his personal account on an online gambling platform, more than $240,000 to certain unknown crypto asset wallets, and more than $99,000 to his personal bank account.”
The commission indicates that Kim's conduct led to the loss of “around $3.7 million of investor funds.”
Kim admitted, yet Zero Edge remained dormant
In a Substack post from July 2024, Kim admitted to a struggle with gambling issues spanning over twenty years, noting that he utilized Zero Edge investor funds to execute leveraged trades on cryptocurrencies. Leveraged trades would have experienced greater losses due to the higher risk/reward profiles associated with those positions.
Kim acknowledged his wrongdoings, stating that his unsuccessful cryptocurrency trades “provoked past issues.” He also noted that he stepped down right after the losses became known and that he informed investors about the poor trades, but he stated that the issue wasn’t related to mixing Zero Edge with his personal finances.
Zero Edge secured over $5 million in pre-ICO funding for its blockchain-driven online casino, where users would wager using the Zerocoin (ZERO). Presumably, that would have served as the profit generator for the company if Kim had followed through on the vision he presented to investors.
That did not occur, and the gaming business is currently undergoing liquidation. In its corporate strategy, Zero Edge outlined intentions for poker and sports betting platforms, both of which never materialized.
The commission indicates that Kim's conduct led to the loss of “around $3.7 million of investor funds.”
Zero Edge Might Have Been a Distinct Idea
In recent years, crypto casinos have surged in popularity, offering a platform for greater adoption and utilization of Bitcoin and other digital currencies. By itself, that momentum might have favored Zero Edge, but if Kim had conducted the business plan ethically and correctly, the company could have genuinely made significant progress.
Zero Edge got its name from its intended business model that aimed to eliminate house edges on popular casino games such as blackjack, video poker, and others.
Regardless of whether it’s a cryptocurrency, an online gambling site, or a conventional gaming establishment, the house edge is the way operators earn profits and the reason many gamblers assert that “the house always wins.” Zero Edge aimed to change that narrative by promoting the use of ZeroCoin, which would have increased the digital currency's value, serving as its main source of profit.
