Richard Kim, a former Goldman Sachs and JPMorgan Chase executive, was indicted on securities and wire fraud charges related to his alleged misappropriation of about $4 million in investor funds for his start-up online casino company, most of which he allegedly lost within a week through gambling on another site, prosecutors said Wednesday.
Investors who lost money in Kim’s scheme included Galaxy Digital, where he had been a venture fund investor for six years, court filings show.
The case against Kim again relates to his company Zero Edge, which the 39-year-old New York resident announced after leaving Galaxy Digital in March 2024, and which purportedly planned to develop a blockchain and cryptocurrency-enabled gaming app.
“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,” an indictment unsealed Tuesday in U.S. District Court in Manhattan says.
Kim diverted about $3.8 million of investors’ funds shortly after closing on a $4.3 million seed financing round in June 2024, according to the indictment.
On Jun 29, 2024, the indictment says, 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’ following leverage trading losses from see found funding proceeds’ and that the company had lost nearly all of its money.”
But in fact, Kim “concealed from the company’s investors that he had misappropriated the funds and used them at an online casino, telling investors that he had lost the money because of a ‘treasury management strategy’ rather than personal gambling,” the indictment says.
The indictment says that Kim gambled on Shuffle, whose website says it is a “VIP Crypto Casino and Sportsbook.”
Zero Edge, which Kim incorporated in April 2024 in the Cayman Islands, never launched its casino. The company entered voluntary liquidation last December.
Kim was arrested in the case on April 15 after the Manhattan U.S. Attorney’s office filed a criminal complaint in that court.
“At the time of his arrest, Kim admitted to the FBI that he knew what he did ‘was clearly wrong from the beginning’ and ‘completely unjustifiable,’ ” the U.S. Attorney’s office said Wednesday.
Kim was released on a $250,000 bond after appearing in court on the same day of his arrest.
Since his arrest, judges have repeatedly extended a deadline that would have required prosecutors to either obtain a grand jury indictment of Kim or drop the charges after prosecutors told the judges they were discussing a possible resolution of the charges with Kim’s defense lawyer.
The latest extension was set to expire on Wednesday, a day after the new indictment was unsealed in court, indicating that the parties were unable to reach an agreement.
KIm reported his conduct to the Securities and Exchange Commission in July 2024, “claiming that he had been ‘grossly negligent’ in misusing company funds but that he ‘had no fraudulent intent throughout’ but rather ‘gambled investor money away’ because he had a gambling addiction,” according to the complaint.
The complaint notes the New York resident is a former chief operating officer of global foreign exchange and emerging markets trading at Goldman Sachs and JPMorgan.
Kim left Goldman in the spring of 2018 to join Galaxy Digital, a digital assets and data center infrastructure company founded by the early cryptocurrency investor Mike Novogratz, who worked at Goldman in the 1990s.
“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 said in a statement on Wednesday.
Kim’s defense attorney declined to comment on the indictment.
A Galaxy spokesman said, in a statement, “Richard Kim left Galaxy in March 2024 to start Zero Edge, a company in which Galaxy had an immaterial balance-sheet investment.”
“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,” the spokesman said.
