SEC Cryptocurrency Casino Scheme: Accusation Against Kim, Founder of Zero Edge
Posted on: May 9, 2025, 3:26 am.
Last updated on: May 9, 2025, 3:26 am.
Todd Shriber @etfgodfatherRead MoreFinancialGaming BusinessJailbound Financier* He admitted to squandering $3.7 million in gambling, crypto trading* Kim's crypto casino, Zero Edge, failed to launch
The Securities and Exchange Commission (SEC) publicly called out the founder of a defunct crypto gambling platform for swindling investors. Richard Kim, the mastermind behind Zero Edge, allegedly mismanaged investor funds to the tune of $3.77 million—lost predominantly through his own reckless betting habits and risky crypto trades.
The SEC has slapped Kim with a laundry list of penalties, including permanent injunctions, disgorgement of wrongfully-earned gains, civil fines, and a permanent ban from holding executive positions in any company. Coinciding with the SEC's action, the U.S. Attorney's Office for the Southern District of New York unveiled a criminal complaint against Kim on April 15.
According to SEC documents, Kim diverted over $2.6 million of investor cash to his personal crypto asset futures trading account, ultimately squandering almost all of it through his risky trading, and transferring over $700,000 to his personal betting account on an online gambling website. Furthermore, he shuffled another $240,000 to unidentified crypto wallets and $99,000 to his personal bank account.
Kim's actions led to the loss of roughly $3.7 million of investor funds, as reported by the SEC.
Kim Fessed Up, But Nothing Ever Came of Zero Edge
In a July 2024 Substack post, Kim made a confession, acknowledging over a two-decade addiction to compulsive wagering. He also acknowledged using investors’ capital to engage in high-leverage crypto trading, a notorious strategy due to its elevated risk/reward potential. Kim admitted that his losses from these risky crypto trades had "triggered old demons."
He claimed to have resigned upon discovery of the financial fiasco and to have come clean about the losses to investors, but insisted that Zero Edge's downfall wasn't the result of mixing company and personal funds.
Zero Edge had secured over $5 million in pre-ICO financing with promises of a blockchain-based online casino where players would bet with the Zerocoin (ZERO). The idea may have been revolutionary, offering casino games with no house edge—a feat enabled by ZeroCoin’s adoption, driving cryptocurrency prices up and ensuring the company's profits.
However, those dreams never materialized, and Zero Edge is now in the throes of liquidation. In its corporate roadmap, the company also planned for poker and sports betting platforms—ambitions that, like the casino itself, remained unfulfilled.
Zero Edge Could Have Been a Gambling Game-Changer
Over the past few years, cryptocurrency gambling platforms have gained significant popularity, serving as a conduit for enhancing Bitcoin and digital currency adoption. Zero Edge, with its ambitious no-house-edge business model, stood to be a pivotal breakthrough in the crypto gaming industry. Unfortunately, the enterprise and its founder fell prey to greed, personal misjudgments, and corruption, leaving investors in the lurch.
Interestingly, Zero Edge's name originated from Kim's proposed business model, which centered around reasonable gaming edges for popular casino games such as blackjack, video poker, and a litany of others. In the gambling world, the house edge is the edge operators enjoy, ensuring that they consistently reign supreme. Zero Edge's concept, if executed ethically, aimed to overthrow that status quo.
In the wake of its collapse, the crypto gambling industry will go on without Zero Edge, but other platforms are likely to learn from its tragic demise and strive to ensure that their actions are honest and their operations transparent.
- The Securities and Exchange Commission (SEC) has accused Richard Kim, the founder of the defunct crypto gambling platform Zero Edge, of mismanaging investor funds worth $3.77 million, primarily lost through gambling and risky crypto trading.
- The SEC's penalties against Kim include permanent injunctions, disgorgement of wrongfully-earned gains, civil fines, and a permanent ban from holding executive positions in any company.
- Kim's actions resulted in the loss of roughly $3.7 million of investor funds, as reported by the SEC.
- Despite Kim's confession and promises of a revolutionary blockchain-based online casino, Zero Edge failed to launch and is now in the process of liquidation, marking a significant setback for the cryptocurrency gambling industry.
