Charlie Shrem's Journey: From Bitcoin Millionaire to Prison

According to Cointelegraph, Charlie Shrem went from running a small online business to becoming a Bitcoin millionaire and making the cover of Forbes magazine. And then, he went to prison. Shrem founded BitInstant, a multimillion-dollar Bitcoin empire, and was later arrested for his role in it. His first business was an e-commerce site that sold various items and charged $5 shipping per item. In his free time, Shrem hung out on online message boards, where he found out about Bitcoin. At the time, the only way to buy Bitcoin was to wire transfer large amounts of funds to Mt. Gox, and it took a week for the deposit to clear within the banking system. Shrem met up with a person in one of these forums named “Gareth,” and the two started a business called “BitInstant” that would allow people to buy or sell Bitcoin instantly. To allow for instant purchases, the company deposited money into Mt. Gox and purchased Bitcoin with it. They then sold this Bitcoin off in smaller amounts to various customers. As their transaction volume grew, they needed more and more cash to deposit into Mt. Gox, and their capital was running out quickly. The two entrepreneurs met Roger Ver, who helped them with a $100,000 capital injection to continue scaling the business. Ver also suggested the team hire Eric Vorhees. Later, Vorhees and Shrem ran across David Azar at a tech convention, who invested more. Finally, during his honeymoon, Azar met Cameron and Tyler Winklevoss on a beach and convinced them to invest in the company, which provided enough cash to allow the company to overcome its scaling difficulties. BitInstant grew so fast it eventually became responsible for 30% of all transactions on the Bitcoin blockchain. Meanwhile, Shrem was struggling in his relationships with his family and the Jewish community he belonged to. Shrem began to feel that his religious community was stifling, especially after he fell in love with a person who was not Jewish. This frustration eventually reached a peak, and Shrem decided to leave the Jewish community. Then, while attempting to disembark from a plane in New York, Shrem was arrested and charged with money laundering for his role in BitInstant. Authorities claimed that some BitInstant customers had used the Bitcoin they purchased from the company for illicit purposes, including criminal transactions on the Silk Road dark web marketplace.