Jay Clayton, U.S. Attorney for the Southern District of New York | Department of Justice
Federal authorities have charged Richard Kim, the former CEO of Zero Edge Corporation, with securities and wire fraud. The indictment alleges that Kim misled investors about how their funds would be used, then diverted company money for personal gambling and speculative cryptocurrency trading.
“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,” said U.S. Attorney Jay Clayton. “Founders who abuse the trust of their investors threaten the integrity of our important and uniquely American venture capital market.”
“Richard Kim allegedly misappropriated millions of investors’ dollars intended to develop his online casino company by redirecting these funds for personal gambling and trading ventures,” said FBI Assistant Director in Charge Christopher G. Raia. “Kim allegedly hedged his bets that false assurances would induce more investments and conceal the true nature of his spending. The FBI remains committed to apprehending any individual who leverages executive positions to defraud others for selfish purposes.”
According to court documents, Kim started Zero Edge in March 2024 as a business aimed at creating an app-based casino using blockchain technology. He told potential backers that investor money would fund development of on-chain games such as craps, roulette, baccarat, and blackjack.
After securing roughly $4.3 million in seed funding, prosecutors allege Kim moved about $3.8 million into his personal cryptocurrency account at Coinbase before transferring $1 million more to other exchanges like Binance, Kraken, and Backpack. Between June 21 and June 27, 2024, authorities say Kim transferred about $7 million—and netted $1 million—to an account at Shuffle.com, which markets itself as a crypto casino and sportsbook.
Prosecutors further allege that Kim sent another $450,000 to unknown crypto wallets and moved approximately $145,000 from Kraken into his personal checking account.
In emails later sent to investors, Kim admitted responsibility for losing most of the company’s assets through leveraged trading with seed round proceeds. However, he continued to tell some investors that losses resulted from a “treasury management strategy” rather than gambling.
At the time of his arrest, according to federal officials, Kim acknowledged wrongdoing during an interview with the FBI: he stated he knew what he did “was clearly wrong from the beginning” and “completely unjustifiable.”
Kim is facing one count each of securities fraud and wire fraud; both carry maximum sentences of up to 20 years in prison if convicted. Sentencing will be determined by a judge if there is a conviction.
U.S. Attorney Jay Clayton credited FBI Special Agents for their investigative work on this case and also thanked the U.S. Securities and Exchange Commission for its parallel civil action against Kim.
The prosecution is being led by Assistant U.S. Attorney Ryan T. Nees from the Securities and Commodities Fraud Task Force.
Officials emphasized that all charges are allegations at this stage; Richard Kim is presumed innocent unless proven guilty in court.
