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Winklevoss twins suffer setback in Charlie Shrem lawsuit

Ordered to pay court costs

Charlie Shrem at Ben's Deli in Manhattan (Ken Kurson)

Charlie Shrem at Ben’s Deli in Manhattan (Ken Kurson)

Winklevoss Capital was ordered to pay Bitcoin entrepreneur Charlie Shrem more than $45,000 in court fees after a federal judge overturned an earlier decision authorizing them to freeze more than $30 million in assets.

Shrem is being sued by the Winklevoss twins, who allege he turned over some 5,000 fewer bitcoins than he should have when hired to make a large buy on their behalf in 2012. According to the New York Times, the Winklevii said he had been given $250,000, but had not turned over as many Bitcoin as that should have bought at the time.

The Winklevoss twins
Winklevii (via Wiki Commons).

When the judgement allowing Winklevoss Capital to attach Shrem’s assets was handed down in November 2018, the Bitcoin in question were worth about $32 million.

Shrem, an early Bitcoin proponent as well as a founder of the Bitcoin Foundation, was convicted in 2014 of violating anti-money laundering laws by using his Bitinstant exchange to knowingly help clients buy Bitcoin to purchase drugs on the dark web criminal marketplace Silk Road. He served one year in jail.

At the time of his release, Shrem claimed to be essentially broke, but then made a number of high-cost purchases, the Winkelvoss’ lawsuit claimed. “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 them, the lawsuit said.

The current ruling does not affect the broader lawsuit in which Winklevoss Capital is seeking the return of the 5,000 Bitcoin Shrem was hired to buy. Shrem has denied the accusation.

The Times article also says that Shrem still owes the U.S. government nearly $1 million in restitution ordered at the time of his conviction.

Leo Jakobson, Modern Consensus senior editor, is a New York-based journalist who has spent much of the last 15 years covering the employee engagement and recognition business. Before that he covered the East Coast side of the Internet boom and bust, and wrote about politics in New York City. Disclosure: Jakobson owns no cryptocurrencies.

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