White-collar crime
The US Attorney’s Office for the Southern District of New York (USAO-SDNY) has revealed that it has leveled fraud charges against a CEO of a start-up tech firm who allegedly gambled away almost $4m in seed round funding.
The feds claim Richard Kim, 39, drained the startup funds to make leveraged crypto trades and gamble via an online casino.
one count apiece of securities and wire fraud
On Tuesday, US Attorney for SDNY Jay Clayton and the FBI’s Assistant Director in Charge of the New York Field Office, Christopher G. Raia, announced the unsealing of an indictment charging Kim with one count apiece of securities and wire fraud.
The USAO-SDNY claims the ex-CEO of Zero Edge Corporation ran a scheme to defraud existing and prospective investors “by making false and misleading statements regarding the use of investor funds and subsequently misappropriating those funds.”
Blockchain casino ploy
While Kim’s alleged one-man criminal enterprise didn’t last that much longer after he founded Zero Edge in March 2024, the CEO nevertheless managed to squeeze an impressive amount of funding from his investors in a short time.
told investors Zero would develop blockchain-powered casino games
Kim set up Zero Edge in March 2024, purporting to build an app-based casino using blockchain and cryptocurrency technologies. Kim told investors Zero would develop blockchain-powered casino games “beginning with craps, and later offering roulette, baccarat, and blackjack.”
Any funds injected into Zero, Kim represented to investors, would bankroll the building of both the technology and the firm itself.
Unfortunately for the investors, Kim directed the seed funds into speculative crypto trades and to gamble online via a casino account held at Shuffle.com, which the feds said promoted itself as a “VIP Crypto Casino and Sportsbook.”
Half-truths
According to an USAO-SDNY news release, Kim emailed investors admitting to misappropriating the funds and that he was solely to blame for wiping $3.67m off of Zero’s balance sheet, leaving the firm almost broke.
Despite his admission, Kim still hid his gambling losses, telling investors he’d instead lost the funds over a “treasury management strategy.”
When arrested, however, Kim came clean to the FBI, telling officers he was aware his actions were “clearly wrong from the beginning” and “completely unjustifiable.”
US District Judge Lorna G. Schofield will hear Kim’s case. Each of the charges he faces carry a maximum prison sentence of 20 years.
