Following the arrest of Bitinstant's founder, the Winklevoss twins say a sheriff is needed to police the land of virtual currencies.
The virtual currency world was shocked this week when Charlie Shrem, CEO of Bitinstant was arrested for money laundering. According to Forbes, the feds allege that Shrem helped a Florida man convert over $1 million for use on the drug bazaar Silk Road.
The Winklevoss twins led a $1.5 million funding round for Bitinstant in 2012,
notes the Financial Times.
Editor’s Note: 18.79% Annual Returns . . . for Life?
At a hearing held by the New York Department of Financial Services, Tyler Winklevoss called the arrest of Charlie Shrem a “speed bump” in the development of Bitcoin.
His brother Cameron said their investment had been made at a time when anti-money laundering rules had not been clear for virtual currency companies.
“No one would deny it was the “wild, wild west,” Cameron said. “The Wild West attracts cowboys and I don't think anyone here would deny a sheriff would be a good thing.”
The Winklevoss twins began buying Bitcoin when one coin was under $10. Tuesday, on the MTGox exchange, one Bitcoin was $944. The brothers are up more than $70 million on their investment in Bitcoin, says the FT. And their reputations and fortunes are closely tied to it.
Shrem's arrest clouds the prospects that the twins will get any return on their investment in Bitinstant, the FT notes.
The situation could prove untimely for the brothers given their current business aims. They are trying to launch an exchange-traded fund that tracks Bitcoin prices and they want to establish Winklevoss Capital as a notable player in New York's angel investing community.
But their backing of Shrem has raised questions about their due diligence and their judgment, the FT reports.
Of the emerging Bitcoin companies that were on the scene in 2012, the twins chose Bitinstant largely because of Shrem.
“Charlie has been in the space for a very long time, and he has an impeccable reputation among Bitcoiners. He knows everyone in the space and everyone knows him,”
TechCrunch quoted Cameron as saying about Shrem.
Now the twins are singing a different tune, calling themselves “passive investors” in BitInstant, but adding “we will do everything we can to help law enforcement officials.”
“We fully support any and all government efforts to ensure that money laundering requirements are enforced, and look forward to clearer regulation being implemented on the purchase and sale of Bitcoin,” the twins also said in a statement,
reported Forbes.
Editor’s Note: 18.79% Annual Returns . . . for Life?
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