Cryptocurrency felon during and after prison

Cryptocurrency felon during and after prison

Previous blockchain blogpost

Charlie Shrem was among the pioneer public faces of cryptocurrency. He co-founded a startup company in 2011 called BitInstant that was one of the earliest cryptocurrency companies processing a third of all Bitcoin transactions. In 2015, Shrem went to prison for two years for aiding an unlicensed money transmitter acquire Bitcoins to trade in the underground marketplace, where it was used to buy drugs. It was a felony that is the first of its kind in the crypto world.

Charlie Shrem entered prison in 2015 after medicating himself with vodka just before his incarceration. In the federal prison camp in Pennsylvania, Charlie Shrem began frequenting the library. It became Charlie Shrem’s sanctuary where he would stay in for hours and read 137 books.

Value of currency

Shrem found himself mulling over the question of what made money worth anything

Shrem found himself mulling over the question of what made money worth anything


Shrem found himself mulling over the question of what made money worth anything. Luckily, the jail economy provided the answer as the prison had its cash, mainly packets of mackerel. For those prison inmates in Lewisburg, sachets of mackerel were an ideal form of coins. Inmates serving long sentences would use stockpiles of mackerel as a store of value, much like a savings account. Gradually he came to believe that the acceptance of any form of money is mostly a social convention. But it was true that some features could make one currency more suitable than another.

Halfway house life

In 2016, Charlie Shrem was transferred to a halfway house and says that living not merely with embezzlers, drug dealers, and fraudsters, but also with murderers, child molesters, and bank robbers was worse than prison. One of the conditions of residency at the house was gainful employment and making money via Internet did not qualify. Therefore, during his time in the halfway house, Shrem worked as a dishwasher for $8 an hour. 

Life after prison

After serving time in prison, the 27-year old Bitcoin pioneer was looking for a real comeback. It was a time when Bitcoin and other digital currencies were about to explode in epic proportions, and their value had already risen to up to six times its previous price. When he tried to visit an online exchange, one of his old haunts, where he had once played with altcoins, he found that all familiar landmarks had gone. The website no longer existed and even the jargon and terminology had changed drastically. It was humbling for Shrem to realize that the Bitcoin community had changed in his absence. 

Rise from fall

Out of the gates, Bitcoin’s first felon took the same stance with the blockchain industry and set about catching up on everything he missed. He gracefully rose from his fall and found a new mission with a determination. Since his release, he started building the Internet’s future by strengthening the ecosystem of the blockchain. In this newly diverse ecosystem, Shrem has positioned himself to play a significant role not only as a coder but also as a connector. Although, after his comeback, he has fallen once on the wrong side, he claims that he is different now. 

Virtual money rivalry

Cryptocurrencies

Cryptocurrencies

When Shrem was one of the first in the game, Bitcoin was the only virtual currency. Now that it has given rise to more kinds of digital money, he is embracing the transformation. He agrees with other pioneers that there will be not just one supreme digital currency but instead many because there is a crypto-pluralism taking hold right now. That may make Shrem the perfect poster child, as cryptocurrencies transition from a form of exchange favored by those who reviled any establishment into a rapidly growing mainstream system. The old Shrem and the likes were not above taking advantage of such a situation either. 

Dash debit card

As Dash took off, Shrem decided to get involved and proposed creating a prepaid debit card. The cardholder can load it with coins, convert them into dollars and use it at any company that accepts a Dash debit card. That way hundreds of millions of digital dollars can enter the mainstream economy. Dash-funded debit cards are several, but Shrem’s innovation would be the first to be used in America. Eventually, it allowed users to convert cash into Bitcoins at conventional banks such as Bank of America and Wells Fargo, at hundreds of thousands of locations across Russia, America, and Brazil including 7-Eleven and Walmart. His plan garnered overwhelming support because people within the Dash universe take someone like Shrem very seriously and reputation plays an important role. Its price shot up to $266/- from $50/- and Shrem became a millionaire overnight again. But expecting more than that was foolhardy and he decided that it is better to let each cryptocurrency do what it does best. 

Digital token sales

Having seen that the new frontier was token sales, Charlie Shrem became the technology officer of a startup, Intellisys Capital, that he predicted would revolutionise the investment world. The plan was to raise funds by issuing blockchain digital tokens as initial coin offerings. The issue was that under American law this would undoubtedly be classified as a security. The decision was made by the company to bar British and American citizens from participating in it to avoid legal trouble. But the idea also had other drawbacks as they would have to depend on partners to vet investors for them. Shrem was back in pitch mode and became the face of the venture, touting Intellisys to the public and the press. He described the proof of concept, a waste-management company, as the fund’s first investment. 

Mired with doubts

As the date approached, Shrem had doubts in his mind and began to get cold feet. A person, already convicted of a financial crime once, selling security would bring intense scrutiny. This thought increasingly made him nervous, restless and sleepless for months leading to the sale. Fortunately for Shrem, fate intervened, and he decided to walk away because it was a bomb. It was easier to take a risk and tarnish his reputation than live in constant fear all his life. 

Taking it easy

Charlie

Charlie

The failure of Intellisys cost him, but Charlie Shrem wants to make the right comeback. He had moved with his fiancée to Sarasota and is living with her in a rented pink townhouse. His abundant off-hours, he spends on relaxing on the beach, boating, eating in upmarket restaurants, and Jet Skiing. Today Shrem is more patient and mellower and less arrogant and cocky than in the past.

Coming up next:

Today, many of the blockchain assets are tokens that are distributed as initial coin offerings. It constitutes the Internet’s second business model. Associated jobs have soared as its value has risen. Candidates who understand initial coin offerings, know how to write smart contracts, and have a good understanding of Ethereum would have an extra competitive edge. Interested applicants should read up the online literature on how blockchain works and be aware of the basics before applying in the field.

First felony in the cryptocurrency world

First felony in the cryptocurrency world

Previous blockchain blogpost

Some businesses and companies prefer to stick to their past, but this is not a good marketing strategy. Instead, it is essential to take a progressive approach and look out for the next big thing. That is what happens when companies begin to accept Bitcoin payment that put them in a position for greater success. Embracing the power of this new blockchain technology shows the customers and prospects of a business that it is well ahead of the curve.

Charlie Shrem comes from a predominantly Jewish and Russian neighborhood in Sheepshead Bay in Brooklyn. His father used to work at a jewelry store, and his mother looked after his sisters and him. Awkward and shy, Shrem blossomed when he discovered that he had a passion for computers. Charlie Shrem learned computer programming and started engaging in hacker forums. While in Brooklyn College in 2009, he co-founded a deals site known as Daily Checkout and fell in love with sales.

Earliest Cryptocurrency Company

BitInstant

BitInstant Source: Coindesk

Charlie Shrem, a promoter’s promoter, was among the pioneer public faces of cryptocurrency. Shrem saw value when Bitcoins were worth practically nothing or maybe a few dollars each. Shrem claimed he was among the ten people globally to find out about Bitcoin. By 2011, he was well known in the network of Bitcoin and co-founded a startup company called BitInstant. He became the Chief Executive Officer of Bitinstant that was one of the earliest and most significant cryptocurrency companies processing a third of all Bitcoin transactions. It helped people obtain digital money and transfer it between exchanges.

Partnering for support

Shrem partnered with Gareth Nelson, a Welsh coder, and handled the business end, managing to raise funds from Roger Ver, an angel investor, and from his mom. But one person who refused to invest warned Shrem that BitInstant had no safeguards to protect against money laundering. That was fine with Shrem as a substantial portion of the clientele were users of Silk Road. These people needed to exchange dollars for Bitcoins to buy drugs on the black market. There was a middleman, a plumber in Florida by the name of Robert Faiella who had a business obtaining Bitcoins for these users.

Abetting with crime

Shrem soon found out what Faiella was up to and helped him source money for drug transactions, rather than shutting him down. Shrem’s partner, as well as the cash-processing company of BitInstant, wanted to stop it. But Shrem encouraged Faiella to disguise his identity using a new email address and username. The flow of money went on until Shrem eventually cut him off in 2012 when Faiella pleaded guilty to running an unlicensed money-transmitting business. By the time he went to prison for four years in jail, he had laundered a million dollar through BitInstant.

Vision with swagger

By 2012, Shrem was a young Chief Executive Officer, a motor-mouthed cocky capitalist, and a proud pothead. He had swaggering ambitions as he wanted to turn BitInstant into the Apple of Bitcoin and his company soon would be processing a massive chunk of all Bitcoin transactions. When a payment processor cut all connections with Bitcoin companies under pressure from MasterCard and partner banks, leaving customer funds stranded, it was BitInstant that hacked together a solution to let users withdraw their money.

Bitinstant gaining traction

Bitinstant raised $1.5 million, most of it from Tyler and Cameron Winklevoss, the twin brothers, who had a venture capital firm

The company raised $1.5 million from Tyler and Cameron Winklevoss Source: CNBC

Bitinstant raised $1.5 million, most of it from Tyler and Cameron Winklevoss, the twin brothers, who had a venture capital firm. The company helped them buy their first Bitcoins. Since then they were hooked. After raising funds, the company’s future looked bright, and Bitinstant became an industry barometer because crypto-economy depended on rapid money transfers. In early 2013, during the Cypriot financial crisis, when bank accounts for regular citizens taxed them 6.75%, Bitcoin suddenly became a haven.

Chaotic early days

Charlie Shrem embodied the legally questionable, chaotic early days of cryptocurrency. Two of Shrem’s best friends quit Bitinstant due to a dispute with the investors. Something went out of Shrem with the departure of his two best friends who were his confidants. He seemed distracted, spent the night partying, sleeping in and showing up late to work. Meanwhile, the site was straining under the traffic surge, leading to waves of complaints. A platform upgrade became mired in legal concerns and technical problems. It became clear that Bitinstant had been operating without licenses, and the cost of acquiring them would be prohibitive. Bitinstant that made Shrem a Bitcoin millionaire eventually went bust and shut down in 2013 as it was all too much for everyone concerned to carry on.

Bitcoin foundation speaker

Shrem became an overnight sensation when he featured in a documentary about the new virtual phenomenon. He co-founded the Bitcoin foundation, which was the first nonprofit advocacy organization for the digital currency. He then flew to Argentina on a Bitcoin foundation mission because by then Shrem had become a proselytizer and a speaker at industry conferences. His business was now himself and not BitInstant as he began to charge speaking fees as all the while his life was a whirlwind of deal-making and partying. Everywhere he went he kept telling people that he is rebuilding BitInstant.

Crime caught up

At first, Shrem got away unscathed as he was enjoying his freedom. He took a vacation to Morocco with his girlfriend, Courtney Warner, where he tried opium. In 2014 it caught up with Shrem when he was arrested in Amsterdam as he was returning from a speech.

Arguments for defense

Robert Faiella

Robert Faiella Source: CBC

Shrem argued his case first by advancing the notion that individuals can spend their money the way they want it as long as it is not harmful to anyone else. And second, at the time he was helping Faiella, the government had not decided how to regulate or even classify Bitcoin. If they had not yet determined whether it acknowledged Bitcoin as money, how could that amount to laundering? Shrem did not know whether the law he had violated was just and had wanted to raise these issues but his lawyers advised against it.

Bitcoins buy drugs

In 2015, Charlie Shrem eventually went to federal prison for two years after pleading guilty. He was abetting and aiding an unlicensed money transmitter client, Robert Faiella acquire Bitcoins to trade in the underground marketplace, where it was used to buy drugs. It was a felony that is considered to be the first of its kind in the digital currency world. Although other Bitcoiners had broken the law, Shrem was the first to be imprisoned.

Coming up next:

Charlie Shrem the first Bitcoin felon went to federal prison in 2015 for 2 years. Upon his release he went about strengthening the ecosystem of blockchain. A real breakthrough came when he created a prepaid Dash debit card. He then joined Intellisys Capital and decided to raise funds in the form of initial coin offering but was mired with doubts, as he feared the intense scrutiny from the authorities and eventually backed off.

The Simple Tool That Can Maximize Your Multichannel Communications Campaign

The Simple Tool That Can Maximize Your Multichannel Communications Campaign

For any marketing professional, these are either the best of times or the worst of times for plying your trade. Communication opportunities are more plentiful than they’ve ever been, which is great news, but along with that glut of marketing channels comes the overwhelming feeling that if you’re not communicating across every possible platform, you’re doing a disservice to your company or your clients. Trigger Systems are a great tool for making sure that you’re making the most of your marketing opportunities.

Wait, what’s a Trigger System, you ask? In simplest terms, a Trigger System is a set of communications and marketing tasks created around a recurring business event, so that you’re always ready to hit the ground running, whether the event is planned or not. And Trigger Systems are supremely flexible, adapting to whatever your communication needs are, so you can set up a Trigger System for situations as different as launching a new product, running a retail campaign or attending a trade show.

It’s a pretty simple idea, but once you think through and document your communications roadmap, you can use it again and again. Just think about how helpful it would be to have a clear, replicable set of PR and marketing tasks that are “triggered” every time your company attends a trade show.

Below are examples of three very different situations where Trigger Systems can help you maximize your multichannel marketing potential. To help illustrate the usefulness and flexibility of this tool, these examples will all be based around a company that’s launching a new beverage in a new, but high-growth beverage category.

Launching a New Beverage

You’ve put in the work of researching the market for your new beverage, creating a great product and developing a brand that you’re confident will resonate with your target customer. Now, you need people to listen and act! A Trigger System for a product launch could include everything from creating press releases and pay-per-click social media and search ad campaigns to creating in-store promotional materials and researching and securing guest articles and backlinks from well-respected beverage publications and taste-making blogs and websites — and anything else that you think will get your product in front of the right eyes! And the best part? When you launch the three other beverages you have planned for next year, you can use the same set of tasks to develop those launch campaigns!

Getting More Out of Your Online Retail Campaign

Many of your potential customers are encountering your new beverage through online channels, and rather than providing a call to action that requires them to visit a physical store, you’re hoping to kickstart sales with an online retail campaign that will bring your beverage right to people’s front doors. When you create a Trigger System, you can think through all the possible avenues for communicating this message, encompassing pay-per-click and remarketing ads, drip email campaigns, a retail splash page on your website, creative product partnerships and more.

Making Noise at a Trade Show

Trade shows are a great way to make a splash with a new product, generating lots of good buzz, making important industry connections and driving big sales orders. Trigger Systems are perfectly suited to trade shows because they can help you create a template that you can use every single time you attend a show. This could include purchasing ads on the show’s website and program, sending invitations to prospects, curating a press list and inviting publications and bloggers to samples and interviews with company leaders, a trade show-specific landing page on your website, refreshed marketing collateral and — of course — a show-stopping new booth design.

Especially when you are launching a new product and building a new business, Trigger Systems can help you create the communications infrastructure that will allow you to execute creative and tactical communications campaigns effectively and seamlessly across as many different channels as possible.

Mike Schaffer is the CEO of Echo-Factory, Inc. Throughout the course of his career, Mike has provided strategic oversight and executive leadership for companies looking to position their businesses for growth, acquisition or both. Mike is an ongoing contributor to CSQ Magazine and a regular speaker at marketing conventions, and mentors start-ups with the USC incubator and the Los Angeles Cleantech Incubator. He also organizes the largest Innovation Group in Los Angeles which meets weekly in Pasadena.