SEC Sues Zero Edge Founder for $3.7M Investor Fund Misappropriation
On Wednesday, May 7, 2025, the Securities and Exchange Commission (SEC) filed a complaint in the US District Court for the Southern District of New York against Richard T. Kim, the founder and former CEO of Zero Edge Corporation. The SEC alleges that Kim misappropriated approximately $3.7 million of investor funds raised for the company, using the money for personal crypto asset trading and gambling.
According to the complaint, Kim raised around $5 million from eight equity investors between March and June 2024 through a seed fundraising round for Zero Edge, a Cayman Islands-based company intended to develop a blockchain-based online casino. The SEC states that Kim represented to investors that their funds would be used to develop and launch the Zero Edge platform. By June 24, 2024, investors had transferred approximately $3.8 million to a Zero Edge crypto asset wallet.
The SEC alleges that starting on June 21, 2024, shortly after the first investor funds were deposited, Kim began transferring the money to his personal crypto asset accounts. By the end of the day on June 24, 2024, Kim had allegedly lost nearly all of the investor funds through risky crypto asset futures trading and gambling at a Curaçao-based online casino.
The complaint details that Kim transferred at least $707,396 to his personal account at the online casino, $99,383 to his personal bank account, and $240,060 to unknown crypto asset wallets. Additionally, Kim reportedly transferred $2,643,982 to a personal futures trading account, where he lost most of the funds due to declining crypto asset prices. The SEC notes that the only apparent legitimate use of investor funds was a $103,635 payment to a payroll services provider.
On June 30, 2024, Kim emailed some investors, admitting to losing approximately $3.7 million through risky crypto asset trades. He attributed his actions to a sudden urge to find a “shortcut to success” and asked to remain with Zero Edge, claiming he could recover the lost funds within three months. However, the SEC alleges that Kim omitted key details in this email, including his transfers to the online casino, his personal bank account, and unknown wallets. Kim resigned as CEO on July 2, 2024, and fled to Dubai and then South Korea around July 6, 2024. Zero Edge entered voluntary liquidation on December 19, 2024, and its platform was never launched.
The SEC further alleges that Kim continued to mislead investors and the public after his resignation. In a July 9, 2024, self-report to the SEC, Kim claimed he provided full transparency to investors, but the SEC states he did not disclose the full extent of his fund diversions. On July 15, 2024, Kim made public statements in a digital media article and a Substack blog post, admitting to losing investor funds through negligent trading but again failing to mention the transfers to the online casino, his bank account, or unknown wallets.
The SEC accuses Kim of violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, along with Rule 10b-5. The agency seeks a permanent injunction to prevent Kim from violating these securities laws, disgorgement of all ill-gotten gains with prejudgment interest, and civil monetary penalties. Additionally, the SEC requests that Kim be permanently barred from serving as an officer or director of any company with registered securities, participating in the offer or sale of securities, and associating with any broker or dealer. The complaint also demands a jury trial.
Kim, 39, previously served as a general partner and COO at a New York-based crypto asset venture capital firm from 2018 to early 2024 and held executive roles in the securities industry from 2012 to 2018. He was also a member of the New York State Bar and practiced law in New York from 2007 to 2012.
Please contact BlockTribune for access to a copy of this filing.
