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Behind the blocks

A crypto pioneer’s journey from convict to compliance convert

Charlie Shrem was atop the cryptocurrency world as CEO of pioneering bitcoin exchange BitInstant when he was arrested for indirectly facilitating drug sales on the dark web. Now post-prison, Shrem talks to Fraud Magazine about his transformation into an evangelist for compliance and regulation in crypto and where he thinks the industry will go next.

In the ever-changing world of cryptocurrency, few figures have experienced the highs and lows of the industry as intensely as Charlie Shrem. In the early days of the bitcoin boom, Shrem emerged as a prominent figure in the community. As the co-founder of early crypto exchange BitInstant, Shrem earned recognition for his pioneering efforts to make bitcoin accessible to the masses. (See “Meet the Bitcoin Millionaires,” by Max Raskin, Bloomberg, April 12, 2013.)

His meteoric rise, however, was cut short in 2014 when he was arrested by U.S. law enforcement for money laundering and operating an unlicensed money transmitting business. The allegations were related to his involvement with Robert Faiella, who used BitInstant to traffic drugs on the dark-web marketplace Silk Road. Shrem was eventually convicted and spent two years in prison. (See “Former CEO Of Bitcoin Exchange Company Sentenced,” United States Department of Justice, Dec. 19, 2014.)

Post-incarceration, Shrem’s story has evolved into a cautionary tale for the industry, and he’s become an outspoken compliance advocate, pushing the complex network of crypto companies and regulators to collaborate. In the wake of recent high-profile crypto cases involving major platforms like FTX and Binance, the need for a robust conversation on compliance and ethical conduct within the industry has never been more critical.

Shrem himself is still heavily immersed in the world of bitcoin. He’s currently general partner of crypto-based venture capital fund Druid Ventures, and host of his own crypto-focused podcast, “The Charlie Shrem Show.” In this exclusive interview, Shrem gives Fraud Magazine his two cents (or rather, 0.0000004 bitcoin, as of early 2024) on his past, his insights into the cryptocurrency landscape, and the profound lessons he’s learned along the way against the backdrop of a crypto industry grappling with its own challenges and controversies.

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