Richard Kim, founder of Crypto Casino Zero Edge, was arrested Tuesday after allegations that he had wagered investor funds.
According to an FBI complaint filed Tuesday in the Southern District of New York, Kim said, “invested investors to invest in Zero Edge, the cryptocurrency technology company he founded, and then diverted millions of dollars into investors’ funds.”
The FBI said Kim lost “almost everything” of $7 million raised from investors and charged him for securities and wire fraud. According to court records, Kim posted a $250,000 secured bond and posted $100,000 in “cash or real estate” to secure it.
Coindesk was the first to report on the Zero Edge incident last July. In an interview at the time, Kim revealed to Coindesk that she gambled investor funds over $3.67 million through a series of risky, leveraged crypto transactions.
“The downfall began with a careless mistake, $80,000 phishing site,” Kim recalls his own memories of what he later shared with Koindsuk in a written document he published as a public apology. “This caused the need to “recover” it to my old demon, to maintain my reputation. ”
According to Kim, he “started a negative spiral of leveraged trading, raising more capital and hiding the truth.”
After losing most of the $7 million dollars, he raised at Zero Edge, Kim told Coindesk that he himself reported himself to the U.S. Securities and Exchange Commission’s public tip line.
“Part of my rationale for actively reaching out to the SEC is, of course, I am truly an f. I lost this money. It was a terrible mistake. But I was not going to run away with this money.”
According to the FBI complaint, Kim’s previous account “we misleadingly explained where the investor’s funds went and why, and omitted them to notify investors that certain funds have been moved to the gambling website Shuffle.com.”
According to the FBI, he initially lost $80,000 in a phishing scam and claimed “not mixing personal and business funds (ED) (ED) (ED) (ED)” but he also did not consider the fact that he sent company funds to online sportsbooks and personal crypto investment accounts.
Kim didn’t respond immediately to this week’s request for comment.
Kim’s arrest shows an impressive fall from grace. Kim, a former executive at Galaxy, a crypto investment company led by Michael Novogratz, also led the elite trading desks for JPMorgan and Goldman Sachs. Prior to that, he was an attorney for Cleary Gottlieb, a prestigious law firm.