SEC Files Charges Against Kim, Alleged Crypto Casino Fraud Founder in Zero Edge Case
Posted on: May 9, 2025, 03:26h.
Last updated on: May 9, 2025, 03:26h.
Todd Shriber @etfgodfather Read More Financial Gaming Business Mergers and Acquisitions He blew off $3.7 million of investor funds on gambling, crypto bettingHe previously confessed to addictive gambling habits
The Securities and Exchange Commission (SEC) slapped charges of fraud against the brainchild of a crypto gambling den, after he squandered a whopping $3.77 million of investor funds on his own betting frenzy and ill-timed crypto trades.
Richard Kim, the brains behind the cryptocurrency casino Zero Edge, now faces "permanent injunctions, conduct-based injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an officer-and-director bar" from the SEC. Coincidentally, the U.S. Attorney's Office for the Southern District of New York unsealed a criminal complaint against Kim on April 15, related to the SEC's action against him.
According to the SEC, just minutes after receiving investor funds, Kim swiftly transferred that money to personal betting and crypto investing accounts, as well as his personal bank account.
He supposedly syphoned over $2.6 million of investor funds to his personal crypto asset futures trading account, losing nearly all of those funds in reckless crypto asset futures trading, alleges the SEC. Moreover, over $700,000 was funneled to his personal account on a gambling platform, while more than $240,000 ended up in certain mysterious crypto asset wallets, and around $99,000 made its way to his personal bank account, states the SEC. These irresponsible actions led to the loss of "approximately $3.7 million of investor funds," spelt out the commission.
Kim Confessed, but Zero Edge Never Saw the Light of Day
In a July 2024 Substack post, Kim admitted to his more than 20-year struggle with addictive gambling habits. He confessed to using Zero Edge investor funds to place leveraged trades on digital currencies, knowing these positions carried higher risk and potential for larger losses.
Kim also owned up to his deceit, stating that his faulty crypto trades "triggered old demons." He acknowledged his immediate resignation from the company and disclosed the bad trades to investors, but he claimed the situation wasn't about commingling Zero Edge and his personal funds.
Zero Edge secured more than $5 million in pre-Initial Coin Offering (ICO) financing for its blockchain-based online casino, where gamers would wager with the Zerocoin (ZERO). Presumably, this would have been the primary revenue-generator for the company, had Kim executed his vision as promised to investors.
Alas, this didn't happen, and the gaming company is currently undergoing liquidation. In its corporate roadmap, Zero Edge had laid out plans for poker and sports betting platforms, neither of which ever came to fruition.
Zero Edge Could Have Been a Game Changer
Crypto casinos have been gaining popularity in recent years, presenting an avenue for increased crypto adoption and use. Alone, this momentum could have aided Zero Edge, but the company - had Kim acted ethically and properly - could've game-changed the online gambling industry.
Zero Edge took its name from its proposed business model, which aimed to feature no house edge on popular casino games, including blackjack, video poker, and many others. This "zero edge" concept attempted to upend the gaming industry's status quo by removing the built-in player disadvantage. Instead of relying on the house edge for profits, Zero Edge planned to leverage adoption of ZeroCoin as its primary profit driver, using token appreciation as revenue.
Whether it's a crypto casino, avid internet casino, or traditional land-based gaming venue, the house edge is how operators generate revenue and why so many bettors claim the house wins. Zero Edge wanted to flip this script by eradicating the statistical disadvantage for players and creating a transparent, blockchain-based gaming environment that could potentially better align the casino's interests with the players, potentially disrupting both the crypto and traditional gambling sectors.
- The Securities and Exchange Commission (SEC) has filed charges against Richard Kim, the founder of Zero Edge, a cryptocurrency casino, for using $3.77 million of investor funds for gambling and unwise crypto trades.
- Kim is facing legal action, including permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and a ban from holding director positions, following the SEC's fraud charges against him.
- In admission of his gambling addiction, Kim confessed in a July 2024 Substack post to using Zero Edge investor funds for risky cryptocurrency trades.
- Despite the potential to game-change the online gambling industry, Zero Edge, which had secured $5 million in pre-ICO financing, is currently undergoing liquidation, with plans for poker and sports betting platforms remaining unfulfilled.
- The Zero Edge business model promised a "zero edge" concept, aiming to remove the built-in player disadvantage in popular casino games, using Zerocoin adoption as the primary profit driver.
- With increased popularity in crypto casinos, Zero Edge, had its founder acted ethically, could have challenged the traditional gambling sector and potentially disrupted both the crypto and traditional gambling industries.
