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Indicted Silk Road Bitcoin Entrepreneur Still In Demand

shrem

For a person under house arrest, Charlie Shrem gets around.

Two months after the bitcoin entrepreneur was indicted on charges of money-laundering and other crimes tied to his virtual-currency business, Mr. Shrem speaks at industry events, has been helping New York hotels prepare to accept the virtual currency for payment, and is working as a consultant.

He even participated in a panel discussion at New York’s Tribeca Film Festival in April after the screening of a bitcoin documentary. But the conditions of his arrest meant that “I couldn’t go to any of the after-parties,” he said in an interview.

Mr. Shrem, 24 years old, was indicted in April in connection with an alleged drug scheme involving his virtual-currency exchange and an online black market. He has pleaded not guilty to the federal charges, and his trial is scheduled for September. Since he was placed under house arrest he has been living in his parents’ basement in Brooklyn, N.Y.

Executives accused of crimes often fade from public view. Mr. Shrem’s staying power, in part, reflects the unusual nature of a far-flung industry that doesn’t have an official leader or centralized organization.

But Mr. Shrem’s continued popularity also irks some bitcoin enthusiasts, who worry it will keep attention on the currency’s potential for misdeeds.

“To the extent that we can get back to thinking about bitcoin as a neutral technology, that would be great,” said Jerry Brito, a bitcoin supporter who is a senior research fellow at the Mercatus Center at George Mason University in Fairfax, Va. Mr. Brito said he hopes the virtual currency’s momentum will “overshadow any particular personality.”

Launched in 2009, bitcoin is an electronic currency that is created on computers and traded between people who store it in digital wallets. A rising number of mainstream businesses accept bitcoin as payment for goods and services.

But bitcoin also has carried a stigma that it is used for illicit activity, an issue that has raised concerns among lawmakers and regulators.

Mr. Shrem’s arrest was a blow to the industry at a time when it was trying to convince lawmakers and regulators it is legitimate.

He was a founding member of the Bitcoin Foundation, a trade group, and was a popular speaker at industry conferences where he was regularly surrounded by throngs of bitcoin enthusiasts.

He also founded BitInstant, a New York-based exchange that allowed customers to swap dollars for bitcoins.

Mr. Shrem initially needed court permission to leave his parents’ home for anything other than meetings with his lawyers. Terms of the house arrest were eased in May so that he can go out between 9 a.m. and 9 p.m. on Sundays through Thursdays, according to a court document.

Despite his busy schedule these days, Mr. Shrem is hampered by one factor: the electronic-monitoring bracelet tethered to his ankle.

Mr. Shrem recently was invited to speak at a bitcoin conference in Washington, but his plans to attend were thwarted at the last minute after prosecutors in his case balked at his lawyers’ informal request to let him leave New York, according to people familiar with the situation.

“I’m grounded,” he said after receiving the news.

Elizabeth Ploshay, one of the conference organizers, declined to comment on Mr. Shrem’s involvement. Ms. Ploshay works at a company that processes bitcoin payments for merchants and is a board member at the Bitcoin Foundation.

Mr. Shrem’s legal troubles don’t bother Brandon Ward, who turned to him in March for advice on how to set up bitcoin acceptance at two Brooklyn hotels.

“He knows a lot of people in the bitcoin world and when I have a question about implementation, he is always right there to answer it,” said Mr. Ward, who manages the hotels that started accepting bitcoin last month. Mr. Ward said he didn’t pay Mr. Shrem for his guidance.

In addition to advising Mr. Ward, Mr. Shrem said he is working as a “business development consultant” for a payments company called Payza that is considering whether to start accepting bitcoin.

“Clearly, Mr. Shrem has an exceptional knowledge of the bitcoin market that we felt would be beneficial,” Payza said in a written statement. The company added that it has set “specific parameters on his role which is based on a limited engagement” and that it is considering his input along with other consultants.

Mr. Shrem said he tries not to think about the prospect that he could be sentenced to prison. Instead, he focuses on positive encounters with other bitcoin enthusiasts, like one who recently approached him and thanked him for explaining how to buy the currency when prices were far below the current level of more than $600.

“He said that he had been trying to meet me and, because of me, he was able to buy a Lexus,” Mr. Shrem said.

Source: http://online.wsj.com/articles/bitcoin-evangelist-is-bound-but-not-out-1404185518

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