A quick spiral
The founder of the Zero Edge crypto casino has apologized after taking at least $3.7m of investor money and gambling it away on leveraged cryptocurrency trades.
Richard Kim, who recently was a general partner of Galaxy Interactive, admitted during an interview with CoinDesk that he lost the cash after a $7m fundraising round that ended on June 20.
his struggles with gambling go back decades
The leveraged trades began the very next day and it was June 29 that he told the board about the losses, which led to the directors requesting his resignation. He blamed the big losses on Bitcoin’s price dropping last month from almost $70,000 to around $62,000 and said that his struggles with gambling go back decades.
Holding up his hands
Kim reported his transgressions to the public tip line of the Securities and Exchange Commission (SEC), explaining that his actions were “grossly negligent. But I didn’t intend to go run away with this money.” He said that falling victim to an $80,000 phishing attack was the catalyst as he tried to claw back losses.
An email received by investors from Zero Edge detailed how Kim handed in his resignation on July 2. Galaxy, which is among the crypto casino’s backers, reported the matter to the relevant authorities.
Not giving up
Zero Edge claimed to be different from other cryptocurrency casinos as it didn’t add edge to the games. Kim only started the company in March after departing Galaxy. He still intends to build the product and repay investors, despite the board of directors planning to wind down operations due to the reputational risk.
compels me to create trustless systems”
Explaining why people should trust him after his recent actions, Kim said: “It is precisely the fact that I have proven untrustworthy that compels me to create trustless systems.”
He isn’t the first person involved in a cryptocurrency company to misappropriate funds and use them to gamble. A developer for the crypto trading platform Cypher stole $317,000 in May and used the money to feed his gambling addiction.