Winklevoss Twins file lawsuit against Charlie Shrem

Charlie Shrem, the founding member of the bitcoin foundation and the co-founder of BitInstant was once an advisor for Winklevoss Twins. Charlie Shrem started his investment in bitcoin back in 2011, the same year he founded BitInstant- Bitcoin Exchange. During this period from 2011 to 2012, the Exchange attracted a lot of investments from major industry players which included a group of investors led by the Winklevoss Capital Management.

The BitInstant Lawsuit

An year later, in 2013 the BitInstant exchange was ‘sued’ for false representation of services, after which the founder Charlie Shrem was arrested in a case of money laundering and illegal purchasing of drugs from the Silk Road. Charlie was sentenced to two years in prison and a fine of $950,000. Charlie Shrem was released from the prison in 2014.

The Case

Charlie Shrem helped the Winklevoss Twins in investing $750,000 into Bitcoin back in 2012. The Winklevoss Twins claim that they were delivered only $189,000 worth of Bitcoin at that time and still $61,000 worth of Bitcoin was yet to be delivered by Charlie Shrem which amounted to around 5000 BTC at that time (According to $12.5 per Bitcoin). Winklevoss Twins claim that they asked Charlie Shrem multiple times for the missing bitcoin but after they did not receive any positive response from him, their accountant documented the frauds and filed the lawsuit. The Winklevoss twins have also quoted an email in the lawsuit which states that:

“I have been patient, and at this point, it’s getting a bit absurd, I don’t take this lightly.”

Charlie’s side of the story

Charlie Shrem claims that after his release from the prison, he had only a very few bitcoin left which he had to sell to pay off his rent. He started working as a dishwasher in a restaurant.

It is believed that Charlie Shrem owns a $2 million house in Florida. Also after an investigation by a private investigator hired by the Winklevoss Twins, it was discovered that the missing 5000 BTC were transferred to Bitcoin Wallets: Coinbase and Xapo in 2013 from a bitcoin address associated with Shrem. It is believed that Shrem had purchased 6 expensive properties, 2 powerboats and 2 Maseratis (luxury cars) from the stolen 5000 BTC.

The Court’s side of the case

Jed S. Rakoff (Judge), is leading the case who is the same judge who sentenced Charlie to prison back in 2012. The Judge has approved the freezing of all accounts of Charlie Shrem on Coinbase and Xapo wallet. The case seems to be in favor of Winklevoss Twins who are adamant to see Charlie back in prison.