The Rise and Fall of Charlie Shrem: From Bitcoin Millionaire to Prison
Charlie Shrem is a name that was once synonymous with success in the world of cryptocurrencies. He went from running a small online business to becoming a Bitcoin millionaire and even made the cover of Forbes magazine. However, his journey took an unexpected turn when he found himself behind bars.
In the latest episode of Cointelegraph’s Crypto Stories, Shrem opens up about the rise and fall of his Bitcoin empire, BitInstant, and the events that led to his arrest.
From E-Commerce to Bitcoin
Before venturing into the world of cryptocurrencies, Shrem ran a small e-commerce site that sold various items like lights, toothbrushes, and razors. It was a simple business that only charged $5 for shipping per item. However, Shrem’s interest in Bitcoin was sparked when he discovered it on online message boards.
At that time, the process of buying Bitcoin was complicated and time-consuming. Users had to wire transfer large amounts of funds to exchanges like Mt. Gox, and it would take up to a week for the deposit to clear. This posed a problem for those who wanted to buy smaller amounts or wanted instant purchases.
Shrem then met a person named “Gareth” on an online forum, and together they founded BitInstant. Their aim was to create a platform that would allow people to buy or sell Bitcoin instantly. The company would deposit money into Mt. Gox and purchase Bitcoin with it, which they would then sell in smaller amounts to customers.
The Scaling Challenge
As BitInstant’s transaction volume grew, Shrem and his partner faced a challenge. They needed more cash to deposit into Mt. Gox to keep up with the demand. Shrem compared it to an ATM needing money to sit in the machine all day. They required 7 to 8 times their transaction volume to operate smoothly.
Fortunately, they crossed paths with Roger Ver, who provided a $100,000 capital injection to help them scale the business. Ver also suggested hiring Eric Vorhees, who later became an integral part of the team. David Azar also joined as an investor, and during his honeymoon, he convinced Cameron and Tyler Winklevoss to invest, providing the necessary funds to overcome scaling difficulties.
The Rise and the Fall
BitInstant’s growth was phenomenal, responsible for 30% of all transactions on the Bitcoin blockchain. However, success didn’t come without its challenges for Shrem. He faced difficulties in his relationships with his family and the Jewish community he belonged to. Feeling stifled, especially after falling in love with a non-Jewish person, Shrem decided to part ways with the community.
Unfortunately, his troubles escalated when he was arrested and charged with money laundering for his involvement in BitInstant. Authorities claimed that some customers had used Bitcoin purchased from the company for illicit purposes, including transactions on the Silk Road dark web marketplace.
Released on bail, Shrem was placed under house arrest and forced to live with his strict Jewish parents, who believed that his arrest was a punishment from God for leaving the community. Shrem expressed his parents’ excitement at seeing him go to jail, feeling that he had hurt them deeply.
This is just the beginning of Charlie Shrem’s crypto story. Stay tuned for part 2 as we uncover the untold story of Charlie Shrem.
Follow the full story: The Untold Story of Charlie Shrem.