Richard Kim, the founder of the crypto casino Zero Edge, has been arrested on allegations of using investors’ funds for gambling. The FBI complaint filed in the Southern District of New York accused Kim of deceiving investors into investing in Zero Edge, then misappropriating millions of dollars of their funds. It was reported that Kim lost almost all of the $7 million raised from investors, leading to charges of securities fraud and wire fraud.

Reports from last year by CoinDesk revealed that Kim’s gambling struggles caused substantial financial losses at Zero Edge. Kim admitted to CoinDesk that he had gambled away over $3.67 million of investors’ funds through risky leveraged crypto trades. He confessed that it all started with an $80,000 phishing scam, which triggered a chain of high-risk trading activities to recover the lost money.

Despite losing a significant portion of the raised funds, Kim eventually reported himself to the U.S. Securities and Exchange Commission. However, the FBI complaint stated that Kim’s accounts of where the funds went were misleading, failing to disclose that some were transferred to Shuffle.com, a gambling website.

Kim’s fall from grace is evident, considering his previous roles at Galaxy, JPMorgan, and Goldman Sachs. Investors, including Galaxy, suffered losses due to Kim’s actions at Zero Edge. Galaxy’s head of communications confirmed their minimal investment in Zero Edge and their immediate reporting of Kim’s activities to the authorities.

Zero Edge was intended to be a revolutionary crypto casino that aimed to provide transparency and fairness to gamblers. Although the platform never launched, Kim’s past struggles with gambling addiction fueled his motivation to create a gambling platform that eliminated the house’s unfair advantage.

As the investigation into Kim continues, his arrest serves as a cautionary tale about the risks of misusing investors’ funds in the crypto industry.