Crypto Casino founder gambles away investors’ funds

Garance Limouzy July 16, 2024

Richard Kim, founder of Zero Edge, a crypto casino, resigned after losing almost $4 million of investors’ funds.

Richard Kim, after graduating from the University of Washington at 18 and from Columbia Law School at only 21, started working as the co-COO of global foreign exchange at JP Morgan. He then continued his career as a chief operating officer for Goldman Sachs. He also worked as an attorney with Cleary Gottlieb, a prestigious law firm. More recently, he was an executive at a crypto firm called Galaxy.

With this impressive resume, when he founded Zero Edge, a crypto casino advertising equal odds for customers, he attracted $7 million of investment, including money from his previous employer, Galaxy, a recognised crypto firm headed by Michael Novogratz. The idea was to create a unique type of crypto casino that would provide unprecedented transparency to the players.

Losing $3.67 million

While everything seemed to work out fine for the new casino, Kim came forward and announced he had lost more than half the investors’ money when the bitcoin price went down in June. Following this disclosure, investors reported his actions to the authorities. Kim also claims that he went willingly to the US Securities and Exchange Commission.

“Part of my rationale in reaching out proactively to the SEC was to say, OK guys, I really f—d up. I lost this money. It was grossly negligent. But I didn’t intend to run away with this money,” Kim declared. He also informed the board of directors, who asked him to resign, which he did.

Gambling addiction

Kim explains that he has struggled with gambling addiction for decades. So when he lost $80,000 of investors’ money, he decided that he could make it back. “The downfall began with a careless mistake—a phishing site that cost $80k. This triggered my old demons, the need to ‘make it back’ to preserve my reputation,” Kim explained. After that, Kim recalls that he “started down a negative spiral of leverage trading, raising more capital, and hiding the truth.”

Kim explains that “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. I felt compelled to make up for my missteps. Within days, millions were in leveraged longs. When bitcoin crashed, I experienced a complete wipeout.”

Kim says he “has every intention” of paying back the investors.