Winklevoss Twins Sue Charlie Shrem For Allegedly Stealing 5,000 Bitcoin

News | November 5, 2018 By:

Charlie Shrem, an entrepreneur, bitcoin advocate, and convicted felon, is being sued by Cameron and Tyler Winklevoss, the founders of crypto exchange Gemini, for allegedly stealing 5,000 bitcoin.

Shrem, CEO of now-defunct bitcoin exchange BitInstant, spent a year in prison for allegedly laundering $1 million worth of bitcoins to help users of the Silk Road marketplace anonymously make illegal purchases. He was also charged with failing to report suspicious banking activity and operating an unlicensed money-transmitting business.

Shrem, who was released from prison in June 2016, said in recent interviews that he went to prison with almost no money. However, in the two years since his release, he made extravagant purchases, including two Maserati sports cars, two powerboats and a $2 million property in Florida.

According to the New York Times, Shrem was the person that first got the Winklevoss twins into bitcoin back in 2012, and they gave him $750,000 to buy bitcoin for them. A few months into this partnership, the twins said, they realized that Shrem had not given them all the bitcoin they were due. Later, in September 2012, the twins gave Shrem $250,000. A month later, Shrem returned to the pair with only $189,000 worth of bitcoin. At the time, one bitcoin was worth approximately $12.50.

After the twins realized their balances did not add up, they requested on several occasions for the return of the missing bitcoin, but Shrem did not respond to any of their request. The twins then hired a private investigator, who came up with the sum of 5,000 bitcoin, worth almost $32 million at today’s prices. According to the complaint, the bitcoins were transferred in 2013 through addresses associated with Shrem and onto the bitcoin wallet services Xapo and Coinbase.

The twins said in the lawsuit that they decided to pursue the missing bitcoins again after they saw Shrem’s recent spending patterns.

“Either Shrem has been incredibly lucky and successful since leaving prison, or — more likely — he ‘acquired’ his six properties, two Maseratis, two powerboats and other holdings with the appreciated value of the 5,000 bitcoin he stole,” an excerpted portion of the filing reads.

As a result of the case, part of Shrem’s assets have been frozen. Judge Rakoff wrote in his order that Shrem had “evidenced an intent to frustrate the collection efforts of his creditors.”

In a statement, Brian Klein, Shrem’s lawyer, said that the claims “could not be further from the truth” and that Shrem will “quickly clear his name” in court.

“The lawsuit erroneously alleges that about six years ago Charlie essentially misappropriated thousands of bitcoins,” Klein said. “Nothing could be further from the truth. Charlie plans to vigorously defend himself and quickly clear his name.”