Investors who took an early interest in bitcoin and held on to their stakes in the cryptocurrency while its price skyrocketed often stood to make an incredible amount of money. Indeed, stories of "bitcoin millionaires" who happened to hold on to an early stockpile of tokens which were acquired before the cryptocurrency phenomenon have inspired countless new investors searching for the next big investment in the space.
Among the prominent millionaires who made their fortunes off cryptocurrency, Charlie Shrem is a polarizing figure. A staunch supporter of bitcoin and the cryptocurrency space, Shrem spent two years in prison for activity related to an unlicensed money-transmitting business. (See more: Silk Road Bitcoin Felon Aims to Help the Industry He Corrupted.)
Background in Bitcoin
Shrem, born in 1989, was a college senior in 2011 at the time bitcoin emerged. He began investing in the cryptocurrency at that time, but eventually lost his stake when his storage service crashed.
Partially in response to this incident, Shrem partnered with a friend and fellow cryptocurrency enthusiast named Gareth Nelson to launch BitInstant. BitInstant was designed as a user-friendly service that "helped people convert dollars into bitcoin," according to CNBC.
BitInstant became a massive success, at one point accounting for roughly 30% of all bitcoin transactions. In the process, it garnered significant attention from investors, including Winklevoss Capital Management. The company was in operation from September 2011 through July 2013. (See also: The Winklevoss Twins Are Bitcoin's First Billionaires.)
In the midst of the BitInstant craze, Shrem described himself as a "bitcoin purist," a supporter of the digital currency who backed the technology because of what he perceived as its increased security and autonomy over traditional banking institutions.
During the rise of BitInstant, Shrem became the vice chairman of the Bitcoin Foundation. In the midst of BitInstant's soaring popularity, Shrem saw his personal wealth increase significantly. (See also: Basics for Buying and Investing in Bitcoin.)
Silk Road Involvement and Arrest
Shrem drew widespread attention in 2014 when he was sentenced to two years in prison for his indirect involvement with the transmission of $1 million in bitcoin to the Silk Road black marketplace.
In 2012, Shrem assisted Robert Faiella with the trading of more than $1 million in cash for bitcoin holdings that would then be transferred via trade to Silk Road customers. Faiella pleaded guilty to operating an unlicensed money transmitting business in late 2014 and was sentenced to 4 years in prison.
In the process of Shrem's sentencing, U.S. District Judge Jed Rakoff in Manhattan ordered Shrem to forfeit nearly $1 million. Shrem officially pleaded guilty in September 2014 to aiding and abetting an unlicensed money transmitting business, according to Reuters.
Judge Rakoff described Shrem as an individual who had "excitedly" participated in the crime. While Shrem could have been sentenced to up to five years in prison (the court's probation office suggested a term of nearly that long), he ultimately remained under curfew and probation through March 2015. He was imprisoned from late March 2015 through June 2016.
BitInstant closed down in 2013, and Shrem resigned from his position with the Bitcoin Foundation after he was charged in early 2014.
Following his release from jail, Shrem reportedly worked as a dishwasher, having lost nearly all of the money he had earned from operating BitInstant through legal fees and penalties.
Post-Prison Return to Bitcoin
Since his release from prison in mid-2016, Shrem has remained a vocal advocate of bitcoin and cryptocurrencies in general. Shrem even announced plans to continue to invest in the cryptocurrency space, but to diversify his holdings and transfer his bitcoin profits toward real estate investments. He has also returned to the industry with a number of new projects and ventures.
In November 2016, for example, Shrem announced the intended launch of Intellisys Capital, for which Shrem would serve as chief technology officer. The fund intended to offer cryptocurrency tokens to stand in for shares of a portfolio of manufacturing and related companies. The fund was dissolved in March 2017.
In May 2017, Shrem joined the cryptocurrency wallet company Jaxx as director of business and community development. Later in 2017, Shrem was linked with Viberate, a blockchain-based startup which aimed to disrupt the way in which musicians without agency representation managed their earnings and concert bookings, according to CoinDesk.
In January 2018, Shrem joined the advisory team for Particl, the open source ecommerce platform.
Charlie Shrem maintains an active online presence. His story has been detailed in books about the cryptocurrency world, where he is often described as the "first felon" in the space. Although Shrem's activity in the cryptocurrency industry has shifted from his earliest efforts leading BitInstant, he remains a staunch and vocal supporter of bitcoin. He is commonly recruited as a speaker on subjects relating to cryptocurrency, and continues to serve a number of digital currency-related companies and organizations in an advisory capacity.