Posted on: July 15, 2024, 06:55h.
Last updated on: July 15, 2024, 06:55h.
Richard Kim, the founder of cryptocurrency casino ZeroEdge, admitted to losing $3.67 million in investor capital on leveraged bitcoin trades that went awry.
Kim resigned from the startup gaming entity earlier this month. In an extensive Substack post, he admitted to misdeeds and acknowledged a “20-year struggle with gambling.” He said a phishing site that cost $80,000 “triggered old demons,” compelling the use of cash from a recent fundraising round on leveraged bitcoin trades that went bad.
I resigned immediately after the losses were crystallized, disclosing what happened to my partner and investors. I kept detailed records — this wasn’t about mixing personal and business funds,” wrote Kim. “My failure was in not speaking up sooner, paralyzed by fear and the desperate need to preserve my reputation.”
Kim’s bitcoin trades were made in June — a month which the largest cryptocurrency shed roughly $5,000. Leverage trades would have incurred steeper losses because such positions carry higher risk/reward profiles.
Kim Pledges to Move Forward
Kim acknowledged that he “really messed up,” but he’s also promising to move forward, telling investors they could benefit from their faith in him.
“To my investors: you didn’t just back a project; you invested in my vision, my potential. I will continue building because the world desperately needs what we started,” he wrote. “It is the precisely fact that I have proven untrustworthy that compels me to create trustless systems. Those who stick with me will be my lifetime beneficiaries.”
One of the investors whose capital Kim pilfered was Galaxy Digital — a crypto banking entity controlled by Mike Novogratz. The firm told crypto media outlets the sum it lost in the Zero Edge fraud was nominal.
In a somewhat defiant tone, Kim wax victim, framing his departure from ZeroEdge as an example of “institution vs. individual, trust vs. trustlessness, company vs. community, computer vs. casino.” He added that investors weren’t just supporting ZeroEdge, they were backing Kim as a person and his potential and vision.
What Future Holds for ZeroEdge
Following Kim’s departure, it’s not yet clear what the future holds for ZeroEdge, but it the cryptocurrency casino was attempting to employ a unique concept.
“ZeroEdge.Bet is a unique blockchain based online gambling platform with 0% house edge casino games, commission-free sports betting exchange and an open-source platform for parties wishing to build and operate their own games,” according to the company’s LinkedIn profile.
Crypto casinos have boomed in popularity in recent years, providing an avenue for increased adoption and use of bitcoin and other digital currencies. With ZeroEdge, the premise would be that bettors would place wagers with the Zerocoin token, thus positioning them to profit from the coin’s potential upside, which would be driven by more players embracing the 0% house edge model.