Richard Kim, a former executive at prominent Wall Street firms like Galaxy Digital, Goldman Sachs, and JPMorgan Chase, has been charged with defrauding investors in his crypto casino startup, Zero Edge. Federal prosecutors allege that Kim solicited over $7 million under false pretenses and misappropriated the funds, ultimately losing most of it through risky trades and gambling activities. Kim was arrested on Tuesday following a formal complaint filed in the Southern District of New York that accuses him of wire fraud and securities fraud for allegedly occurring between March and July 2024. The FBI claims Kim devised a scheme to defraud investors, with Zero Edge raising over $7 million in a seed round closing around June 20th. The alleged misappropriation began shortly after the funding closed, with initial reports indicating Kim lost at least $3.67 million shortly after funding closed, while prosecutors later cited a figure closer to $4.3 million. In an attempt to explain his losses, Kim attributed them to leveraged crypto trades during Bitcoin’s June decline, citing a long-standing gambling addiction and a downward spiral. He expressed remorse, stating that after receiving the funds, he felt compelled to make up for his missteps. The contrast between Kim’s Wall Street experience, serving as a general partner at Galaxy Interactive and holding COO roles in trading divisions at Goldman Sachs and JPMorgan, and now facing criminal charges is stark. Following this news, the investment firm behind Zero Edge, Galaxy Digital, reported Kim’s conduct to authorities, stating that their own investment was immaterial. Kim later claimed he proactively contacted the SEC about his actions, admitting they were grossly negligent but denying intent to steal. The wire fraud charge involves using interstate communications to misappropriate funds, while the securities fraud count alleges Kim used manipulative and deceptive devices, including untrue statements or omissions related to securities. The U.S. Attorney’s Office for the Southern District of New York is prosecuting the case; however, Kim was released on a $250,000 secured bond despite resigning from Zero Edge on July 2nd. Despite his resignation and efforts to repay investors, Kim’s alleged actions have cast a shadow over his previous successes in the financial industry.