- Richard Kim has apologized for misappropriating at least $3.67 million from Zero Edge
- Kim has lost the money through leverage trading Bitcoin, resulting in a “complete wipeout”
- Investors, including Galaxy, have sought refunds and answers following the incident
The founder of blockchain startup Zero Edge has apologized for misappropriating at least $3.67 million in company funds. Richard Kim, who is also a former general partner at Galaxy Interactive, lost the money leverage trading Bitcoin but was brought to an untimely end when he experienced a “complete wipeout.” The situation has left investors, including Galaxy, seeking refunds and answers.
“I Really F****d Up”
Kim, previously employed at high-profile firms such as JPMorgan, Goldman Sachs, and Cleary Gottlieb, had a promising career before his recent downfall. In a statement to CoinDesk, he admitted that his losses stemmed from a long-term struggle with gambling, succinctly admitting, “Guys, I really f—-d up” when he realized he had lost the farm.
Zero Edge, which Kim pitched somewhat ironically as a groundbreaking crypto casino offering transparency and fairness, managed to raise over $7 million from investors, including Galaxy. However, just one day after closing its seed round on June 20, Kim began engaging in leveraged cryptocurrency trades that rapidly depleted the company’s funds.
Within just nine days, he was forced to inform the board of directors about the significant losses, leading to his resignation on July 2:
The downfall began with a careless mistake – a phishing site that cost $80k. This triggered my old demons, the need to ‘make it back’ to preserve my reputation. [I] started down a negative spiral of leverage trading, raising more capital, and hiding the truth. Within days, millions were in leveraged longs. When bitcoin crashed, I experienced a complete wipeout.
Kim Retains the Faith
Galaxy, led by Mike Novogratz, had a minor investment in Zero Edge and was one of the parties that reported Kim’s actions to the authorities, with further punitive action almost certain. Kim has committed to repaying investors.
Zero Edge was shut down by his partners as a result of Kim’s actions, but he told CoinDesk that he didn’t believe this was the right course of action, adding that he would bounce back:
I messed up catastrophically. But I refuse to give up. To my investors: you didn’t just back a project; you invested in my vision, my potential.
The situation is reminiscent of the actions of former crypto project Substratum, whose CEO day traded with some ICO funds; the coin was delisted by Binance two months later and the project folded later that year having run out of funds, including losses made from the trading.
