Winklevoss Brothers Settle Lawsuit with Charlie Shrem

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Tyler and Cameron Winklevoss have reached a settlement against their fellow Bitcoin entrepreneur Charlie Shrem, where the court, having been informed of the settlement between the parties, under the direction of Judge Jed Rakoff, dismissed the case. In the lawsuit, the twins had sued Mr. Shrem where they accused him in November last year of stealing 5,000 Bitcoins from them in 2012.

Charlie has had a particularly volatile career as a cryptocurrency evangelist, what with the stint he served in jail. He entrepreneur has a penchant for technology and finance and in his early years in college, founded the website dailycheckout.com selling refurbished electronic equipment that would earn him $600 a week.

He invested in Bitcoin at its infancy in 2011, at his college senior year and partnered with fellow enthusiast Gareth Nelson to form BitInstant, to help users turn dollars into Bitcoin. The company made Shrem a millionaire in his early twenties and it was responsible for more than 30% of Bitcoin transactions. He was also a founding member of the Bitcoin Foundation which has made the adoption, standardization and regulation of Bitcoin its agenda in Canada, Argentina and Australia. All this was just before he got arrested for the scandal involving flipping of Bitcoins on the dark web for illegal purposes.

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Before this lawsuit, Charlie Shrem had served time and been released in 2016 for aiding and abetting a fraudulent unlicensed money transfer business , and he sent approximately $1 million worth of Bitcoins to the notorious drug website Silk Road. The website was basically described the wild west of the internet where drug deals, document forging and gun running services thrived. The founder, Ulbricht Ross, made millions in the three short years the website was operational before landing a lifelong prison sentence.

The Winklevoss twins had hired Shrem to buy Bitcoins on their behalf in 2012, and sent him $250,000 for this purpose, of which only $189,000 was accounted for. Shrem built the brothers the agreed stockpile and came up short by nearly $60,000 in Bitcoin market value at the time (one Bitcoin was $12.50). He did not divulge this information and the Winklevoss twins only realized later, after the value had increased to the tens of millions of dollars.

The brothers were suing Shrem for the return of the value of 5,000 Bitcoins which culminated to the sum of $31.3 million. The brothers noticed the theft in January 2013 and demanded that Shrem remit the difference and provide a comprehensive report on how he spent their money, failure to which legal action would be taken towards him. It is not clear why the lawsuit took 5 years to institute, my guess is that digital asset law was still a very touchy subject, especially due to its almost untraceable nature.

However, in the five year period after Shrem was contracted by the brothers, he was making large purchases in actual physical fiat in real estate, acquiring two power boats, and incredulously two Maserati in a total sum of close to $7.5 million. When the lawsuit began, investigations prompted the court to freeze Shrem’s assets and accounts temporarily and this is speculated to be the reason why the parties opted for an out of court settlement. The court ruled, upon receiving news of the settlement that the parties would have a thirty day window to reopen the suit if the settlement was not effected within that time.

Charlie Shrem’s settlement offer has not been disclosed but it is safe to say that the Winklevoss brothers are appeased enough to drop the lawsuit.

 

 

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