The creator of the cryptocurrency casino ZeroEdge, Richard Kim, acknowledged that he lost $3.67 million in investor funds due to leveraged bitcoin trades that went wrong.
Kim left the fledgling gaming company earlier this month. He revealed his transgressions and acknowledged a "20-year struggle with gambling" in a lengthy Substack post. According to him, a $80K phishing website "triggered old demons," requiring the deployment of funds from a recent fundraising round on leveraged bitcoin trades that were unsuccessful.
“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 traded bitcoin throughout the month of June, when the market saw a $5,000 decline in value. Because leveraged positions have larger risk/reward profiles, the losses on these trades would have been more severe.
Kim Promises to Proceed
Although Kim admitted that he "really messed up," he also promised to move on and assured investors that their confidence in him will pay off.
“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 precise fact that I have proven untrustworthy that compels me to create trustless systems. Those who stick with me will be my lifetime beneficiaries.”
Mike Novogratz's cryptocurrency bank Galaxy Digital was one of the investors whose money Kim embezzled. The company said to crypto media sources that the money it lost in the Zero Edge scam was insignificant.
Kim played the victim in a somewhat rebellious manner, comparing his exit from ZeroEdge to a situation in which “an institution vs. an individual, trust vs. trustlessness, company vs. community, computer vs. casino” occurred. He went on to say that investors were supporting Kim as a person, his potential, and his vision in addition to ZeroEdge.
What's Ahead for ZeroEdge?
It's unclear what ZeroEdge's future holds now that Kim has left, but it's obvious the cryptocurrency casino was trying to use a novel idea.
"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.
The rise in popularity of cryptocurrency casinos in recent years has made it possible for people to embrace and use Bitcoin and other digital currencies more widely. The idea behind ZeroEdge is that by using the Zerocoin token to place bets, bettors will position themselves to benefit from the coin's potential gain, which will be fueled by additional players adopting the 0% house-edge model.