The Securities and Exchange Commission (SEC) recently charged Richard T. Kim, a 39 year old New York lawyer, with fraud for allegedly misappropriating approximately $3.7 million of investor funds that he raised to build a blockchain-based online casino to be called Zero Edge.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Kim with violating the anti-fraud sections of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission’s enforcement complaint alleges that Kim secured commitments of $5 million from eight investors in a seed fundraising round, representing to investors that their funds would be used to develop and launch the Zero Edge platform (gambling website). However, minutes after the first investors placed their funds in the Zero Edge wallet, Kim began diverting those funds for his personal use, as claimed by the SEC. Within a few days Kim had transferred all the approximately $3.8 million in investor funds received into his personal crypto asset accounts, and allegedly diverted more than $2.6 million of investor funds to his personal crypto asset futures trading account and lost nearly all those funds trading crypto asset futures, as per the SEC. He also, the SEC alleged, diverted more than $700,000 to his personal account on an online gambling platform, more than $240,000 to certain unknown crypto asset wallets, and more than $99,000 to his personal bank account.
As alleged, Kim’s actions resulted in the loss of approximately $3.7 million of investor funds, and he confessed to investors that he misappropriated and lost their funds, but he omitted material information to minimize the extent and character of his misappropriation. The Zero Edge platform never launched, and the company is now in liquidation. Kim resigned as CEO and fled the United States, flying from Puerto Rico to New York, then to Dubai and ultimately to Seoul, South Korea.
The SEC complaint seeks permanent injunctions, conduct-based injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an officer-and-director bar. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York unsealed a criminal complaint against Kim.
Have You Been Charged with Misappropriating Investor Funds?
Nationally known and acclaimed SEC defense attorney David Chase, of the Law Firm of David R. Chase, has successfully represented individuals in SEC enforcement investigations around the nation for more than twenty-five years after having served in the SEC’s Enforcement Division in the position of Senior Counsel. If you are under SEC investigation, or just received an SEC subpoena and are unsure of your next steps, contact David at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. Visit the Firm’s website for content on David’s national SEC defense practice and to review the firm’s prior successful results at: www.securitiesfrauddefense.net.
