Richard Kim, the founder of Crypto Casino Zero Edge, was arrested on Tuesday after claiming he had gambled away investors’ funds.

According to a FBI complaint filed on Tuesday in the southern district of New York, Kim induced “fraudulent investors to invest in Zero Edge, a cryptocurrency technology company he founded, and then incorrectly spent millions of dollars in the funds of these investors.”

The FBI said Kim lost “almost all” of the $ 7 million he traveled from investors and accused him of securities fraud and wire fraud. According to the Court’s registers, Kim published a secured bond of $ 250,000 and put $ 100,000 in “cash or real estate” to secure it.

Coindesk should first report on the Zero Edge incident last July. In an interview at the time, Kim revealed to Coindesk that he had gambled away more than $ 3.67 million of his investors’ funds through a series of high-risk-geared crypto-trader.

“The downfall began with a careless mistake – a phishing place that cost $ 80,000,” Kim said in his own memory of what went wrong, which he shared with Coindesk in a written statement, which he later published as a public apology. “This triggered my old demons, the need to ‘make it back’ to preserve my reputation.”

According to Kim “he started” a negative spiral of gearing, raised more capital and hidden the truth. “

After losing most of the $ 7 million he had traveled to Zero Edge, Kim Coindesk told him he reported himself to the US Securities and Exchange Commission’s Public Tip Line.

“Part of my reason to reach out proactively to SEC was to say, ok guys, I was really f -do. I lost this money. It was grossly negligent. But I didn’t intend to run away with that money,” he told Coindesk in an interview.

According to the FBI complaint, Kim’s previous accounts described “Misleading, where the investors’ funds had gone, and why and omitted to inform investors that certain funds had been transferred to Shuffle.com, the game site.”

Kim’s claim that he initially lost $ 80,000 to a phishing -fidus and never “mixed[ed] Personal and Business Funds, ”According to the FBI, failed to account for the fact that he had also sent corporate resources to an online sports book and personal crypto investment accounts.

Kim did not immediately respond to a request for comment this week.

Kim’s arrest marks a striking fall from grace. Kim, a former director of Galaxy, Crypto Investment Firm led by Michael Novogratz, also led Elite Trading Writing Tables at JPMorgan and Goldman Sachs. Before that he was a lawyer with the prestigious law firm Cleary Gottlieb.

Galaxy was among the investors in Zero Edge who lost money as a result of Kim’s activities.

“Mr Kim left Galaxy in March 2024 to start Zero Edge, a company where Galaxy had an intangible balance investment,” said Michael Wursthorn, Galaxy’s head of communication. “After learning from certain acts taken by Mr. Kim in his role in Zero Edge, we reported his behavior to the authorities together with other investors.”

Kim beat Zero Edge as a first-in-the-stroke crypto-casino that would smooth out the rules of players through improved transparency.

Zero Edge never launched, but Kim told Coindesk last year he was motivated to build it because of his history of gaming addiction and his frustration that the house often had an opaque and unreasonable edge over players.

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