Galaxy Digital former executive Richard Kim faced similar treatment after his April 15, 2024 arrest. In late July 2022, the Manhattan U.S. Attorney’s office filed a criminal complaint against him. According to the complaint, Kim misappropriated more than $3.8 million in investor money from his company’s coffers, Zero Edge. He founded Zero Edge shortly after departing Galaxy Digital in March 2024.
Individual Defendants Zero Edge are a Connecticut-based developer of blockchain and cryptocurrency-enabled online gaming applications. That inspiration led Kim to found Kimoji in 2016, and in June 2024, Kim closed a $4.3 million seed financing round. Not long after, he allegedly diverted the money for personal expenses, including gambling on a site called Shuffle, touted as a “VIP Crypto Casino and Sportsbook.”
The indictment chargeing Kim was unsealed June 29, 2024, in the U.S. District Court for the Southern District of New York in Manhattan. The indictment shows that he converted the funds to his personal accounts. From there, he got into leveraged cryptocurrency trading and gambled away nearly all of the company’s fortune.
“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,” – Manhattan U.S. Attorney Jay Clayton.
Kim’s misdeeds were only uncovered after a consortium of investors, led by Galaxy Digital, self-reported Kim’s behavior to regulators. The chief communications officer at Galaxy Digital confirmed the role of his company in sounding the alarm to law enforcement about Kim’s actions.
“Upon learning of certain actions taken by Mr. Kim in his role at Zero Edge, we, along with other investors, reported his conduct to the authorities,” – spokesman.
In July 2024, Kim admitted in an email to some investors that he was “solely responsible for the loss of $3.67 million of the Company’s balance sheet,” attributing it to leveraged trading losses from the funding proceeds. According to the indictment, Kim told investigators that his use of company money was due to a gambling addiction. He did plead guilty to one count of “gross negligence,” but he maintained that he was without fraudulent intent.
“After obtaining investors’ funds, Kim misappropriated them by transferring them to personal accounts, where he made leveraged cryptocurrency trades and gambled away substantially all of the company’s money,” – indictment.
The U.S. Attorney’s office chastised Kim’s conduct as outrageous. They ruled that his conduct was “egregious from the outset” and “wholly unjustifiable.”
After his arrest, Kim went to court the same day and was released on a $250,000 bond. His criminal defense attorney has not yet responded to the indictment publicly.
In December 2024, Zero Edge entered voluntary liquidation as it became evident that the company could no longer sustain operations following the financial mismanagement attributed to Kim.
Richard Kim, 39, of New York, who spent six years at Galaxy Digital. At Zero Edge, he has succeeded as a venture fund model investor before taking off his own Zero Edge. His case raises serious issues all around accountability in newer industries such as blockchain technology and cryptocurrency.