The founder of the Zero Edge cryptocurrency casino recently made headlines for all the wrong reasons. Richard Kim, who previously worked at Galaxy Interactive, admitted to losing a staggering $3.7 million of investor funds on leveraged cryptocurrency trades. This reckless behavior came to light after a $7 million fundraising round concluded on June 20. The very next day, Kim began his leveraged trades, only to find himself facing massive losses as Bitcoin’s price dropped from nearly $70,000 to around $62,000.
Kim’s gambling addiction, which he claimed dates back decades, played a significant role in his downfall. On June 29, he finally confessed to the board about the losses, prompting them to request his resignation. In a bid to come clean, Kim reported his actions to the Securities and Exchange Commission (SEC), acknowledging that his behavior was “grossly negligent.” He attributed his downward spiral to falling victim to an $80,000 phishing attack, as he desperately tried to recoup his losses.
Despite his checkered past, Kim expressed his commitment to repaying investors and continuing to develop Zero Edge. The cryptocurrency casino, which prided itself on not adding an edge to its games, was Kim’s brainchild after leaving Galaxy. However, the board of directors is considering winding down operations due to the reputational risk associated with Kim’s actions.
In a bid to rebuild trust, Kim emphasized the importance of creating trustless systems, stating, “It is precisely the fact that I have proven untrustworthy that compels me to create trustless systems.” Unfortunately, Kim is not the first individual in the cryptocurrency industry to misappropriate funds for gambling purposes. In a similar incident, a developer for the crypto trading platform Cypher stole $317,000 to fuel his gambling addiction.
The fallout from Kim’s actions serves as a cautionary tale for investors and industry insiders alike. It underscores the importance of due diligence and vigilance when investing in the volatile world of cryptocurrency. As the cryptocurrency market continues to evolve, incidents like these highlight the need for greater oversight and accountability to protect investors and maintain the integrity of the industry.