In college, Charlie Shrem co-founded the e-commerce website BitInstant, which assisted people in the conversion of dollars to bitcoins. (Photo Credit: Wikipedia)

Bitcoin Millionaire Charlie Shrem Speaks Out on Experiences

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On a recent episode of “Death, Sex & Money” on WNYC, Charlie Shrem explains how he took a chance on bitcoin, and his life was forever changed because of it.

On the show, Shrem said he grew up in Brooklyn, New York, in a tight religious community. He learned from a young age the value of a dollar from his parents, who “didn’t do anything to excess.” However, he became looser once he started to make a lot of money of his own.

During high school, Shrem ran a lucrative computer-repair service with his friends. Then in college, he co-founded the e-commerce website BitInstant, which assisted people in the conversion of dollars to bitcoins.

He told the podcast host Anna Sale, “I was, like, 22 years old. I had half a million dollars sitting in the bank. I had no expenses. Life was great.”

According to a CNBC report, “At one point, according to a report on Bitcoin.com, BitInstant accounted for almost 30 percent of all bitcoin transactions and even received investment capital from investors like Roger Ver. Then a mistake cost Shrem nearly everything and landed him in prison. A BitInstant user began reselling bitcoin on Silk Road, an underground marketplace known for illegal activity, Shrem explains to Sale.”

Shrem said, “This guy was a customer of ours. He bought bitcoin and then would resell [them to people who] would then go buy drugs and stuff like that. I knew about it. I didn’t really care and I was a young kid. I didn’t care enough to stop it because I was making money.”

He then changed his mind, and sent the user an email that said, “I know you’re on Silk Road, I know you’re reselling. You better stop, you know. You better calm down.”

Unfortunately, Shrem didn’t alert the authorities, and even though he had since shut down BitInstant, he was placed under arrest for operating an unlicensed money-transmitting business and money laundering.

After losing and paying lawyers the majority of his money, he served a year in federal prison. He then worked as a dish washer while on parole.

Shrem said that good did come out of all the isolation, which gave him time to think and regain balance. He said, “In prison, you have to forget about the world on the outside. You have no internet, no communications and you’re cut off from the whole world. Everything is given to you. You have shelter, you have food, a shower, water. You don’t need to spend a dime. You don’t have to worry about bills.”

The hard work washing dishes for 11 hours a day was humbling and helped Shrem grow up. He said, “In hindsight, it was one of the best experiences… going from being a millionaire [to] washing dishes for $8 an hour.” But he added, “I loved it.”

According to CNBC, “Now 27, Shrem, who also appears in the Netflix documentary ‘Banking on Bitcoin,’ still applies some of those lessons in his daily life. He’s an executive at a technology firm, WNYC reports, he’s starting a new family and he’s careful with his money. While he still owns a few bitcoin, he says he’s striving toward more financial independence and responsibility.”

He said, “I’m investing, I’m taking a lot of bitcoin, selling it as the price goes up and putting it into real estate. Because then if bitcoin goes to zero — which, it’s an experiment, it could — I won’t be on the street. A lot of people have, like, 95 percent of their wealth in bitcoin. Great for them, but I got to be smart. I’m getting married, we’ll have children eventually, I can’t, you know, I can’t speculate with my rent.”

By Charles Bernstein

 

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