Crypto Casino Founder Admits to Investor Losses on Bitcoin Trades
Richard Kim, the founder of cryptocurrency casino ZeroEdge, recently admitted to losing $3.67 million of investor capital on leveraged bitcoin trades that went awry. Kim resigned from the startup gaming entity earlier this month. In an extensive Substack post, he confessed to his misdeeds and acknowledged a “20-year struggle with gambling.” He revealed that a phishing site incident costing $80,000 “triggered old demons,” leading him to use cash from a recent fundraising round on leveraged bitcoin trades that subsequently soured.
“I resigned immediately after the losses were crystallized, disclosing what happened to my partner and investors. I kept detailed records — this wasn’t about mixing personal and business funds,” wrote Kim. “My failure was in not speaking up sooner, paralyzed by fear and the desperate need to preserve my reputation.”
Kim’s bitcoin trades occurred in June — a month during which the largest cryptocurrency shed roughly $5,000. Leverage trades, by their nature, incur steeper losses due to their higher risk/reward profiles.
Kim Pledges to Move Forward
Kim acknowledged that he “really messed up,” but he is also promising to move forward and told investors they could still benefit from their faith in him.
“To my investors: you didn’t just back a project; you invested in my vision, my potential. I will continue building because the world desperately needs what we started,” he wrote. “It is precisely the fact that I have proven untrustworthy that compels me to create trustless systems. Those who stick with me will be my lifetime beneficiaries.”
One of the investors whose capital Kim misused was Galaxy Digital, a crypto banking entity controlled by Mike Novogratz. The firm told crypto media outlets that the sum it lost in the ZeroEdge fraud was nominal.
In a somewhat defiant tone, Kim portrayed himself as a victim, framing his departure from ZeroEdge as an example of “institution vs. individual, trust vs. trustlessness, company vs. community, computer vs. casino.” He added that investors were not just supporting ZeroEdge, but also backing Kim as a person and his potential and vision.
Future of ZeroEdge
Following Kim’s departure, the future of ZeroEdge remains uncertain, but the cryptocurrency casino was attempting to implement a unique concept.
“ZeroEdge.Bet is a unique blockchain-based online gambling platform with 0% house edge casino games, commission-free sports betting exchange, and an open-source platform for parties wishing to build and operate their own games,” according to the company’s LinkedIn profile.
Crypto casinos have surged in popularity in recent years, providing an avenue for increased adoption and use of bitcoin and other digital currencies. With ZeroEdge, the premise was that bettors would place wagers with the Zerocoin token, thus positioning them to profit from the coin’s potential upside, driven by more players embracing the 0% house edge model.
Consequences and Moving Forward
The fallout from Kim’s actions has led to significant challenges for ZeroEdge and its stakeholders. The misuse of investor funds for personal gain has not only caused financial losses but also damaged trust within the crypto community.
For ZeroEdge, the priority now is to rebuild its reputation and assure investors of its commitment to transparency and security. This involves implementing robust internal controls, seeking external audits, and fostering a culture of accountability.
Investors, on the other hand, must remain vigilant and demand higher standards of governance from crypto ventures. The case of ZeroEdge underscores the importance of due diligence and the need for regulatory frameworks to protect investors in the rapidly evolving world of cryptocurrencies.
Kim’s resignation and public confession mark a critical turning point for ZeroEdge. The company’s ability to recover and thrive will depend on its efforts to restore trust, deliver on its promises, and navigate the complex regulatory landscape of the crypto industry.
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Richard Kim, founder of ZeroEdge, admits to losing $3.67M of investor capital on bad bitcoin trades. The crypto casino faces uncertain future as Kim resigns.
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