Bitcoin billionaire twins Cameron and Tyler Winklevoss, have filed a $32 million lawsuit against Charlie Shrem, a U.S entrepreneur and crypto pioneer, reports the New York Times.
The Winklevoss brothers, who founded the Gemini cryptocurrency exchange, became the first bitcoin millionaires when they placed an $11 million bet on a burgeoning bitcoin, with the price of BTC eventually hitting an all-time high of $20,000 against the US dollar in 2017.
Incidentally, the $11 million was a payout from their 2004 lawsuit against Facebook and its founder Mark Zuckerberg.
Winklevoss twins sue Charlie Shrem
Charlie Shrem, 28, is the co-founder of Bitinstant, a bitcoin exchange startup that shut down in 2014.
The man who made money selling bitcoin, found himself serving time in federal prison because of it. Shrem was convicted after pleading guilty to conspiracy “to commit money laundering.”
He agreed to have sold bitcoins worth over $1 million to people who used it to purchase drugs on Silk Road, a dark web marketplace that was shut down by the U.S authorities in 2013.
Now, Cameron and Tyler- incidentally they and Shrem are former business partners- allege that their former investment advisor and BitInstant partner stole 5,000 bitcoins from them in 2012.
At the current rates, the crypto would be worth over $31 million, though that was close to $100 million in Dec. 2017 when Bitcoin hit its all-time high.
Shrem living large despite being broke
After leaving prison, Shrem reportedly said that he was virtually broke at the time of his incarceration.
However, in the two years since his release, he has increasingly appeared to be enjoying an affluent lifestyle. He has acquired property in Florida worth $2 million, bought flashy cars and two boats.
An excerpt from the filing makes as much allegation, noting that:
“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.”
The lawsuit stems from a 2012 investment of about $250,000 in Bitcoin (BTC). It is alleged that the Winklevoss brothers entrusted Shrem with the task of investing the funds, but he only delivered an equivalent of $189,000 worth of BTC.
As the price of bitcoin was $12.50 at the time, it means that Shrem did not deliver about 5,000 coins.
As part of the case, US District Court Judge Jed S. Rakooff has allowed the freezing of bitcoin funds that Shrem holds at Xapo and Coinbase.
The Winklevoss twins are said to have hired a private investigator who has stated that the missing Bitcoins might have sent to addresses at these two exchanges.
Mr. Shrem has not stated in person what he thinks of the suit, but his lawyer Brian Klein referred to lawsuit claims as “erroneous,” saying that they “nothing could be further from the truth.”
He added that his client “plans to vigorously defend himself” as he tries to “clear his name.”
A related development also reveals that Shrem still owes the U.S government up to $950,000 in restitution arising from his 2014 plea deal. The trial judge at the time of his conviction has supposedly said it’s within the law to freeze Shrem’s financial assets.