A former Bitcoin tycoon who served a year in prison for his role facilitating transactions on the Silk Road digital drug bazaar is being sued by none other than the Winklevoss twins, the HarvardConnection creators famous for suing Mark Zuckerberg for allegedly stealing the idea for Facebook from them.
According to the New York Times, Cameron and Tyler Winklevoss find it more than a little curious that Charlie Shrem’s post-prison purchases have included two Maserati sports cars, two powerboats, and a $2 million Florida mansion, despite the fact that Shrem characterized himself as almost penniless at the time he went to prison a few years ago and said he worked as a dishwasher after getting out. The Winklevoss’ recently unsealed lawsuit alleges that Shrem in fact has a rainy day fund composed of 5,000 bitcoins, worth an estimated $32 million at today’s prices, that he supposedly stole from them in 2012. The Times wrote:
“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 from” the Winklevoss twins in 2012, the lawsuit says.
Shrem worked as an investment partner with the Winklevoss brothers in 2012, when they gave him hundreds of thousands of dollars to help them invest in bitcoin and he allegedly shorted them on returns. (The twins’ bitcoin holdings were estimated at over $1 billion in late 2017, shortly before the cryptocurrency entered a massive slide that has decreased its worth by about 70 percent.) At the time, the bitcoins were worth only a tiny sliver of what they are worth now. The missing coins were overshadowed by other legal battles between the twins and Shrem over the latter’s now-defunct company BitInstant, but Cameron Winklevoss told the Times that having heard of Shrem’s indiscreet purchases since 2016, it is now “time to get to the bottom of it.”
According to the Times, the twins hired an investigator who determined that their bitcoins were transferred onto wallets at the Xapo and Coinbase exchanges belonging to Shrem, and have additionally secured a court order imposing a freeze on those accounts. An affidavit filed as part of the lawsuit additionally appears to indicate that Shrem owes the government nearly $1 million in restitution from his criminal case, the paper added.
In a statement to the Times, Shrem’s lawyer Brian Klein wrote:
“The lawsuit erroneously alleges that about six years ago Charlie essentially misappropriated thousands of Bitcoins. Nothing could be further from the truth. Charlie plans to vigorously defend himself and quickly clear his name.”
Since leaving prison, Shrem has continued to work on several cryptocurrency-related projects, including the advisory business Crypto.IQ.
In a recent interview with business and tech news network Cheddar, Shrem said that the point of cryptocurrency was to “give people more liberty and open up an alternative financial system that’s not controlled by any third parties or centralized system.”
“If we don’t have to have that centralized or trusted location, then it removes the ability for hackers to steal our money and our things, it removes the ability for corruption, embezzlement, all these things go out the window,” Shrem added.
Correction: Due to a copy-paste error, a prior version of this article briefly referred to the “Winkleboss twins.” Though this was very funny, we regret the error.