How Charlie Shrem Became a Bitcoin Millionaire | Crypto Stories

We were flying home from Amsterdam. It was Sunday night around 7 o' clock when we landed. We got off the plane, we went to custom. At that moment, the guy was taking a little bit extra long time to stamp my passport. And as he was doing that, 10 agents surrounded me.

Move.

Put your hands. Don't move your hands. I felt like it was an army. This wasn't your New York police officer here. These were like federal agents. Well, yeah. I said, what's going on? They said, please come with us. You're under arrest.

Go over to the baggage claim and get Charlie's bags.

What's going on? Well, he's been arrested. Was arrested at the airport.

Charlie Schrem, 24 years old, arrested today. Schrem ran a site that enabled people to transfer money from bitcoin to cash via his company called Bitcoin.

I was on the COVID of Bloomberg magazine. I was on the COVID of Forbes, on the COVID of their financial times. I had a big spread of my picture of me throwing gold coins in the air, being called the bitcoin prince in Bloomberg Business Week. There were no other people that I had to share the playing field with. I was the only one.

You all know the legendary and wild tale of Charlie Shrem, right? This dude was a real pioneer in the early days of bitcoin, Quickly becoming a bitcoin millionaire. But ended up behind bars at the ripe age of 24 and then got free and became an investor. Cointelegraph was on this rollercoaster from the get go, tracking every twist and turn. But how did Charlie end up in this mess? Did a fairy swoop in, wave her wand and grant him his very own bitcoin empire, only for it all to turn into a pumpkin after midnight? Nah, it's not even close. We got Cholly to spill the beans on something he's never shared before. His untold story. And let me tell you, what we heard was mind blowing. So get comfy folks, because this tale is anything but boring.

Well, well, well, look who we have here. Charlie Shrem. I've heard you're quite a money enthusiast.

What?

When did you start raking in the big bucks?

So the first time I earned money, my cousin knew I could do some website stuff and said, hey, like I have someone who can build the website. I have this really good idea. He would tell me any, anything extra goods they would have, he'd want to like sell them on this website. We'd like sell things like for free. With just $5 shipping lights and computer routers and audio equipment. And a mug or shoes, toothbrushes, electric toothbrushes, shavers. And it was called DailyCheckout Do. And we hired Jewish people, Muslims. And you had black people from Canarsie in Brooklyn. And you had me and my cousin Joey, who looked very like kind of white. We had everyone and we got like maybe 500 to 2,500 orders. My job every day, because it was a small business, was not only to maintain the website and to do these like funny videos where I would sell the product the next day, but then I would print the shipping labels on a printer and I would help the guys put shipping labels on them and ship it out.

At our last session, you mentioned feeling pressure from your parents. Has their attitude changed since you started earning money?

Around the same time that happened, my parents backed off because I started to gain a lot more confidence in the real world.

Has anything else changed?

Something changed. But what changed was weed was cannabis. Everyone went to sleep and I had the basement to myself. I could relax and I would stay awake. That's when around the same time that I got my first computer at home and we got the 56k modem where you can do dial up. And AOL first came out America Online. And that was when the first time that became like a big part of our lives. That's when all the Europeans were waking up and all the different people on the forums where it was the most active at midnight, 2am, 3am so that's when I hung out. Majority of people who conversed into like message boards, if you will, did it through these like forum software. And I was a member of a lot of them, especially the cyber security worlds. Why did you enjoy spending time on online forums? Was it important to you? It was really great because on the Internet people didn't judge me based on any other factors other than what I was contributing to the conversation. In that moment. You couldn't like see what these people look like. They're pictures that they'd upload to the forum and that's what they look like.

Hi, Charlie. Yo, Charlie. Hello, Charlie.

Charlie.

So I started to have a lot of friends there, in my opinion, was appreciated on the Internet very greatly. People listened to me because on the Internet people respond, respected you and listened to you based on the contributions that you were making.

Hold on, man. When did you first hear about Bitcoin?

I remember I was like griping a lot about PayPal and I was talking about how I was helping this charity raise money and PayPal was freezing the account and someone said you should Take out bitcoin. And I was like, what the is bitcoin?

No way, dude. That's pretty cool.

And this was like 2010 maybe or something. We have the dollar. Japan has the yen and the Internet, it has the bitcoin. This online currency officer offers a new way to use money. But many aren't sold on the idea. Heather, there's a reason we call it cold hard cash. It's right here. But can it be a pain to send somewhere? And some think that banks are too involved with cash transactions and value. Well, that's where bitcoin comes in. It's online, anonymous, and constantly changing in value. First, I didn't believe in bitcoin. I didn't even read the whitepaper until like a long time later. I love playing around with cool software that did unique things.

What were your first steps?

First thing I did was I registered for the bitcoin forums. The day I registered was like 20 days after Satoshi's last post on the bitcointalk forums was the day I registered and had my first post.

So did you immediately buy into that crypto stuff, bitcoin as you folks call it?

I still didn't believe in it until many years later, but I was just happy to be part of the community. There was a software with a file. When you download the software, it's going to download the whole bitcoin blockchain to your computer. It was like well written little shitty software was just one very small line of code. It never overheated my computer either. I can leave it running and then it's. Once it catches up, it in real time updates this big file on your computer that's like 2 gigabytes with all the other transactions. And then I was like, wow, I have the whole ledger here and other people are having my ledger too. You can transact with these people back and forth, back and forth. And like everyone had their address and all of a sudden you're part of this community of people around the world. And I thought that was very unique. It's a decentralized system. It's very easy to grasp.

Where did you meet Gareth?

I met this guy on the bitcoin forums, Gareth, and we were talking a bunch and he had this good idea because he saw that buying bitcoin was very difficult, that people that wanted to buy bitcoin had to wire money to an exchange and buy large amounts of it. And there was no one really doing like just selling to individual people bitcoin. And I said, well, Gareth, what would it Cost to build that.

He's like, well, if you're paying me, I can do it for a thousand bucks.

And I'm like, well, I'll send you 1,000 bucks. And he's like, okay, let's build it. He was very smart and blunt and straight to the point and had this like weird sense of humor that I kind of liked.

Was it like sarcasm?

I could tell it was like kind of Asperger's autistic. But I grew up with a lot of people with mental health issues. It's very big in the community. So I'm very used to like being social with these people. It's like I'm better friends with autistic kids.

How did you set up your company? Do you sign any papers?

I don't think we ever signed any document or anything till much later. But we were like 50, 50 partners from the start. I think he like publicly announced in the forum thread somewhere. He's like, attention everyone. Charlie and I are now 50% business partners in this new venture called Fast Mount Gox Pay. And when we launched it, there were a lot of people who were really excited for it. So we very instantly had a lot of business. I never thought it would become like a full time business or that we'd earn our livings or lifetime or anything like that. We just very quickly it got very big. I knew that the more money we had as a business, the more money we would make. I knew my father put money that was given to me in my bar mitzvah when you're 13 years old and then it's given to you when you're an adult to help you get started in life. I had eight or nine thousand dollars in that account and my father said no. But then I went to my mom, which is what I always do, and she said yes. So my father had to give me the money and then I used that money to get going and that's when things got really crazy. Once I got that 10,000, we started to grow very quickly.

I still need to get it back. Then there was Mount Gox, the largest exchange. How was your business structured? What was the scheme?

Buying bitcoin on Mount Gox involved wiring, sending a wire transfer to Mark Karpelis Paul personal bank account and then he would manually add the money to your account. It took about a week to get money credited. Once you are credited with dollars, you can buy bitcoin. So there were a lot of times we would wire money to Mount Gox in large amounts in advance and people would then Pay us in the United States in our software. Once it realized that we got paid in the United States, would buy bitcoin and send it to the customer.

Alright, did you two do this alone using your father's money? You didn't have any investors really?

So when we started to grow, bitinstant Roger Veer was our first investor and he gave us $100,000 to continue growing. And then one of the things Roger did was ask me to hire Eric Voorhees, who didn't have a job at the time and didn't have any money and was just moving back from Dubai, where he tried to become a real estate agent there and couldn't be successful.

Did you hire him without any previous work experience?

Eric's very smart and he was also a kid like me, and he hadn't found his way in the world. And then one day Eric and I set up a little booth in New York City at a New York Tech Day, which wasn't like an event to raise money. It was more just to show off our company and see what other businesses were in the area. But then David walked by and I'm like, oh, I know you. You're David Azar, right? Or something. Dr. Azar is your dad? He's my dentist. He's like, yeah, yeah, yeah. He walked by and he said, oh.

We'Re looking to invest some money in a new business. Show me what you got going on here.

And I showed him what I had going on at the time.

He's like, I'll get you the million dollars.

So I was like, sounds great. Eric and I were like working out of Eric's apartment. We were working out of a co working space in New York City, working out of my house. And we were like all over in Brooklyn and New York City. And then David one day met the Winklevoss twins on like a beach in Ibiza. So David was on his honeymoon. Actually, this was right when the Social Network came out, which was a big movie about creation of Facebook. And Facebook was like the only social network at the time. Then Arnie Hammer played the Winklevoss twins. So all of a sudden he sees them walking on the beach. And David's really smart. There's no chairs to sit like on the beach in Ibiza at the Beach Club. So took his wife and his chairs.

And he said, take my chair, we're leaving. But before you leave, my name is David, I'm an investor in New York City. I have to tell you about this bitcoin thing.

And he called me and he said.

Charlie, explain bitcoin to them.

And I explained bitcoin to them on speakerphone with Eric. And they said, all right, we're on.

Vacation for a couple of weeks. We'll call you when we get back to New York City.

Tyler and I were on vacation and an individual who's a friend of a friend approached us and said, introduce himself, said hello. And then we had a bit of a conversation about digital currency. And then when we got back stateside, he sent some material over and I started reading through it and I looked at Tyler and I said, you know, this is either completely made up and kind of a pie in the sky idea, or there's something really big here.

Whoa. For real? What'd they do, heat you up?

So I didn't hear from them for like a month. And then a month later they called us up and we started talking about bitcoin a lot. We spent like a week at this point. David forced us to get an office. So we got an office on 23rd street in Broadway. We split an office with a Broadway company. So they were doing like Broadway shows, plays, and we were like doing bitcoin financial company, but we were above Starbucks. It was awesome. Cameron and Tyler would come to the office and everything. They came to the office a lot. We really got to know them one night when they met up with Eric and I on a Saturday night. We went partying with them all night. And we got really close with them. And it was around that time that they decided to also invest with David into the company.

And did they invest money?

And it became true. They ended up putting in a significant amount of money.

Why did you need more money?

It always needed more money because we were growing in transaction size. So in a way that an ATM needs money to sit in the machine all day, we needed money to sit in the exchanges for a week because it would take a week to top up again, it was a cycle. So we always needed seven or eight times our daily transaction volume. We always needed more money.

How much did they invest?

They invested hundreds of thousands of dollars. I think almost a million dollars. And then they lent the company money. Another half a million dollars too.

Did you really have a big company?

We were the first venture backed bitcoin or crypto startup to ever exist in the world. We were the first bitcoin company to ever raise money with the first TechCrunch article about us. But I didn't realize the significance of that at the time. I went online and I bought one bitcoin last night. Really, it's the future. I don't know. I didn't feel real. Real's gonna change. Just watch. I started to spend a lot of time in the city and started this nightclub with some friends of mine, evr. And this was the only place in the world at the time, I think, where you could actually spend bitcoin in, like, a physical place. So it wasn't just a nightclub. It was like a whole bitcoin experience. And everyone from Roger Veer to the CEO of Blockchain.info, peter S.N. smith to Barry Silbert from Genesis and Grayscale to the Winklevoss twins, Fred Wilson from Union Square Ventures. Like, everyone who was anyone who was involved in bitcoin was at this place, at least at one point over the course of, like, the year and a half of its existence. I ended up talking to this girl a lot who worked there, and because she was kind of like the managing things and running the show, that she got trained to do all the bitcoin transactions.

Wait, was that Courtney? Did you meet her at a club? Did you ask her out?

We got to start to know each other and everything, but I was always afraid to ask her out and to tell her that I liked her or whatever.

How did you two meet?

Our other mutual friends. We always spend a lot of time together. They set us up on a blind date. We're the only ones who were at the club. Everyone else wasn't there, and we went out that whole night together, just us two. Actually threw up on her because I drank too much Jameson, and she cleaned up the whole place, a different bar. So, like, everyone was like, what are you doing with this guy? But she stayed with me and everything. We started dating, and we were pretty serious very quickly.

Was Courtney also from a Jewish family?

Courtney was the first non Jewish woman that I ever dated. I was spending less and less time in Jewish Brooklyn and more time with Courtney in the bitcoin world at this, like, fake apartment above the nightclub that wasn't even an apartment. It was like an old dentist office that we threw some beds into the old medical rooms or whatever.

Wow, that's significant. How did your parents react to this? You mentioned they're very religious.

I never actually told them. They caught us talking one time on the phone. My mom overheard us talking. And then my mom had a nervous breakdown and told me that if I dated this girl, I was going to be kicked out of the community. And reminded me about the whole edict that was signed by my grandfather and that the whole Situation that my family would be kicked out from the community.

What about your father?

My father was more sane about it because my father probably had done the same thing when he was younger and knew that maybe this was just a fleeting thing and it would be a phase that would pass. I promised them that I would not date Courtney anymore. And of course I just lied. I had no intention of not dating her anymore.

Did you have deep conversations with your father before this happened?

I don't remember having a lot of real heart to heart conversations. My father was probably about like the birds and the bees, stuff like that. But he kind of like asked me on a drive home one time, know.

About all like sexual situations, right?

And I said, yeah, yeah, I know everything. And he's like, all right, good. And that was kind of it. But there was so much about love and things like that that now as a 34 year old, I didn't know. I missed out on so much learning. I had some conversations with my father, but they were always very in the religious context. Torah and religious Judaism. It was part of our daily lives. We kept kosher religiously.

Tell me more about your father.

My father was in the committee of the synagogue itself, which included the rabbi and all the other people. I had some great rabbis growing up. Like my rabbi growing up of my small little synagogue in Brooklyn. He's the son in law of the two chief rabbi of Israel and he right now himself is the chief rabbi of England. I can never speak to these people again, by the way. Like I have no conversation in like over 10 or 12 years. Like I've been excommunicated from the whole Jewish world.

You seem a bit sentimental. Were you always like that? Did you cry as a child?

I cried a lot as a child. I cried. I cried a lot as a child. I also lived in the basement, but I lived on my own down there. So it was very okay. Anti Semitism was such a big part of our life growing up. It was so normalized for me to be bullied because I was the Jew kid on the train. Want to take it there? Dirty Jew, you know, they drop eggs on me and stuff like that. But it was Brooklyn and everyone was persecuted. It was just like everyone bullied everyone. It was part of like the way you grew up.

Hold on, let's get back to the religion. Were you being prepared to become a rabbi?

I was definitely prepared to become like a rabbi, 100%. A lot of family members and cousins and stuff like that are rabbis in Brooklyn and New Jersey and Israel and stuff. Like that right now. So you wanted to become a rabbi? I never wanted. Absolutely not. Absolutely not, no, never. Very early on I started to realize that I wasn't fit for the religious world. And it started to give me a lot of anxiety. Those are the first instances of anxiety that I ever remember.

I see, so that's why you wanted to break free.

I had dreams of getting out. I had dreams of not of fitting in, but also like getting out very early on. And so I realized the only way to get out was through money. Interesting. So the money my parents are and were and still are, even though I haven't seen them in like 10 years. Very imposing, very like, take over your life. Like I needed to get out of that, get out of their yoke and maybe one day I could like be an equal.

Well, how did you go about it?

It all led into a moment. In September of 2013. It was the Jewish holiday, I think it was Rosh Hashanah or something. And so at that holiday you had to be home eating food and like being with the family and praying for like three days straight. And I had no intention of like being there. And so I went to synagogue and they prayed really hard. Fake. And then I went to my very, very, very religious uncle's house. Like 30, 40 people there, young and old, 90 year old guy with the beard who's like the old rabbi to the two year old kid.

And.

And I am like in the middle of this 22 year old, successful firstborn of the family. So I'm considered like the leader of the tribe. And I'm looking around and I'm like saying myself, I do not want this life. I'm done. If I have to spend one more meal, like, I love them and I love the food and I love the family and I love all that. That wasn't that. It was just I didn't want to live that life. I was looked down at the dining room table. I saw my whole life in front of me. I saw like me as a kid and I saw me as an old person. I saw the upper bounds and the lower bounds of my life. So I said, I'm going to go and find my own God and find my own religion and figure it out for myself. I already had the backbone of a community of bitcoin. I already had this like family all over the world that I felt would support me no matter what happened. Little did I know that a couple of months from now I would have to put that to the test. I excused myself. I told them I Was sick. I wasn't feeling well. They had no suspicion. I went back to my parents house, packed up everything I could into a suitcase, wrote my parents a handwritten letter.

A handwritten letter? Say what? Why?

Like, you're not even allowed to write on the religious holiday. But I said something like, I can't live this life. I love you guys. You know, I'll see you later. I'm so short. It was like one page. And that night when they finally came home, my parents had like a nervous breakdown and apparently they had to call the ambulance from my father and stuff like that. It was really bad.

So you're saying you caused harm to your parents health?

Apparently they were good the next day because they started sending the Jewish mafia after us, Threatened to harm Courtney. I know they did it under, like, you know, duress. And they were so sad about me leaving that they were under like, trauma themselves. But they sent people to stake out our apartment. They never left. They would just be outside our apartment all the time. So I was like on lockdown for weeks until they finally let up or I had to have people like, come and take me out. They had people who were very successful and wealthy who owned like, big hotels in Manhattan, like, who would literally, like, bring me up into their offices and sit us in a chair. This guy's a fucking king. And tell me, you need to come back and you need to leave Courtney. We're big, powerful, mighty people. We own New York City. We own the world. I just laugh. And I was like, go fuck yourself, you know? You're so stupid.

Are you for real?

Did you tell them that I'm the bitcoin prince? I'm going to do whatever I want. I was on the COVID of Bloomberg magazine. I was on the COVID of Forbes. I was at top of the world. And I was dating this beautiful girl who actually liked me before I was on top of the world. But the reason I was in all those newspapers and stuff was that bitinstant was the only way to buy bitcoin in a fast and easy way where you can walk up to like your local grocery store or your local bank or your local whatever and buy bitcoin. We were in a million locations around just the United States alone. TechCrunch did a study, and we were 30% of all of the transaction volume on a given day on the bitcoin blockchain. It was huge. Millions of dollars a day. Yeah, it was millions of dollars a day. I don't know how the government will react to bitcoin. But I spend thousands of dollars on lawyers every day just to make sure that I'm not going to go to jail. It's super terrifying. I mean, I don't want to go to jail, and I don't want to become a martyr either. Fight was still happening until my arrest happened.

What about your parents at this time?

You know, when you do something wrong, you expect your parents to just give you unconditional love. They thought I deserved what was coming to me. They were excited to see me go to jail because they felt that I hurt them so hard. So it was like God was doing the work. They got more religious by that. They're like, wow, God helped us. They brought Charlie home. I'm like, oh, my God. Like, my life is over. I am. You're supposed to care about my. One thing is my happiness, and I'm the completely opposite of that. I'm unhappy. I was very impressed with myself about how I never judged anyone. And looking back, I. Looking back, I was such, like, an asshole of a kid before I got arrested. And prison really taught me the sense of family, real family.

Sam.