Zero Edge Crypto Casino Enters Liquidation After Founder’s Reckless Gambling Spree

In a shocking turn of events, Zero Edge, a promising crypto casino, has collapsed into liquidation after its founder Richard Kim lost nearly $3.7 million of the company’s seed funding in a series of high-risk crypto bets. What started as a minor phishing scam spiraled into a catastrophic financial loss, underscoring the inherent risks and challenges within the cryptocurrency world.

• Richard Kim resigns after losing $3.67 million in leveraged bets
• Zero Edge enters voluntary liquidation in the Cayman Islands
• Liquidators claim Kim misappropriated assets before disappearing

The Rise of Zero Edge

Zero Edge, founded by Richard Kim—a former executive at Galaxy Digital—aimed to revolutionize the online gambling industry with its promise of equal odds for customers. The company closed a $7 million seed financing round on June 20, 2024, setting the stage for what many hoped would be a game-changer in the crypto casino space. Kim’s extensive background in traditional finance, including stints at Goldman Sachs and JPMorgan, and his transition to the crypto world with Galaxy Interactive in 2018, positioned him as a visionary in decentralized finance.

The Fall

The downfall of Zero Edge began with a phishing scam that cost Kim an initial $80,000. In a candid interview with CoinDesk, Kim explained, “This triggered my old demons, the need to ‘make it back’ to preserve my reputation.” Despite his intentions to rebuild, Kim’s resolve crumbled as he received the seed round proceeds. “By the seed round’s close, I was ready to rebuild, to start fresh, putting past demons aside. But the moment I received the proceeds, something snapped,” he confessed.

Kim’s attempt to recover the initial loss led him to engage in high-risk bets using borrowed money in cryptocurrency markets, known as leveraged crypto bets. These risky maneuvers resulted in a staggering loss of approximately $3.67 million, leading to his resignation on July 2, 2024. A phishing scam is a type of fraudulent attempt to obtain sensitive information by disguising as a trustworthy entity in digital communication, which in this case tricked Kim into losing the initial funds.

The Aftermath

Following Kim’s resignation, Zero Edge sought voluntary liquidation in the Cayman Islands. However, the liquidators paint a different picture, alleging that Kim misappropriated the majority of the company’s assets before disappearing. “Kim misappropriated most of the company’s assets and then ‘disappeared’,” the liquidators stated. This stark contrast to Kim’s narrative of gambling losses adds another layer of complexity to the case.

The SEC has initiated an investigation into Kim’s actions, signaling increasing regulatory scrutiny on crypto ventures. As of February 2025, the liquidation process continues with a petition for court supervision filed due to Kim’s alleged misappropriation of assets.

Lessons Learned

The Zero Edge debacle serves as a sobering reminder of the risks inherent in the cryptocurrency and startup world. Kim’s case highlights the psychological pressures faced by founders in the high-stakes world of decentralized finance, where the promise of quick gains can lead to disastrous financial decisions.

Kim remains determined to continue his vision of building trustless systems—systems that operate without the need for trust in intermediaries—drawing on psychological insights from Carl Jung to frame his personal journey. However, the future of Zero Edge and similar projects remains uncertain, with legal and financial constraints casting doubt on their viability.

Despite the turmoil, the broader implications for the crypto gambling industry are significant. Investors must navigate the fine line between innovation and risk, while the industry as a whole must address the need for robust oversight mechanisms to prevent similar incidents.

Key Takeaways and Questions

• What led to Richard Kim’s resignation from Zero Edge?

  Kim resigned after losing most of Zero Edge’s seed funding through high-risk bets shortly after the seed round closed.

• How much money did Richard Kim lose?

  Kim admitted to losing around $3.67 million in company funds.

• What triggered Kim’s gambling spiral?

  Kim’s gambling spiral was triggered by an initial loss of $80,000 to a phishing scam, which he attempted to recover from.

• What is the current status of Zero Edge?

  Zero Edge is seeking voluntary liquidation in the Cayman Islands, with a petition for court supervision filed due to Kim’s alleged misappropriation of assets.

• What are the differing accounts of Kim’s actions?

  Kim claims he lost the money through gambling and negligence, while liquidators assert that he misappropriated most of the company’s assets and then disappeared.

I really fucked up. I lost this money. It was grossly negligent. But I didn’t intend to go run away with this money.

This triggered my old demons, the need to ‘make it back’ to preserve my reputation.

By the seed round’s close, I was ready to rebuild, to start fresh, putting past demons aside. But the moment I received the proceeds, something snapped.

Kim misappropriated most of the company’s assets and then ‘disappeared’.