Charlie Shrem walked out of federal prison this week. The former CEO of BitInstant and Bitcoin Foundation founder announced his release in a blog post titled \"Onward,\" in which he described his plans
Charlie Shrem walked out of federal prison this week. The former CEO of BitInstant and Bitcoin Foundation founder announced his release in a blog post titled "Onward," in which he described his plans for the summer. "Currently I'm home in southern Pennsylvania where Courtney and I have relocated temporarily. We will spend the summer months enjoying the outdoors, good food, family, friends and the small things that I missed while I was away," Shrem wrote.
He cannot give interviews while under the terms of his supervised release, but his post suggested he approached his reentry with optimism. "I'm grateful for the opportunity to be back home," he concluded.
The bitcoin community's reaction to his release carries weight because Shrem remains a central figure in the young cryptocurrency space. Federal prosecutors convicted him of operating an unlicensed money transmission business, one of the charges leveled against him and his co-defendant Robert M. Faiella, who went by "BTCKing" online. Faiella had sold bitcoin to users of Silk Road, the dark web marketplace, and prosecutors contended that Shrem knew about and participated in this arrangement.
The original indictment charged both men with two counts of operating an unlicensed money transmitting business and one count of money laundering conspiracy. Shrem pled guilty to a single count of operating an unlicensed money transmitting business. Federal sentencing guidelines suggested he spend at least 57 months behind bars.
Judge Jed S Rakoff rejected that recommendation and sentenced Shrem to 24 months, followed by three years of supervised release. During the hearing, Shrem's attorney Marc A. Agnifilo made the case for a lighter punishment or probation alone. Agnifilo emphasized that Shrem was 21 when he launched BitInstant and 22 when he made the mistakes now being punished, arguing his immaturity rather than malice had driven him.
Agnifilo also drew a technical distinction: Faiella sold bitcoin to drug users, not suppliers or manufacturers. The money laundering statutes, he suggested, targeted organizations moving proceeds for dealers, not consumers. "The crime he committed is so much a product of youthful bad, bad, bad judgment," Agnifilo told the court, "and not appreciating the important role he had, not realizing that he had to grow up faster than he did because it was no longer about just sitting at a computer and writing computer code and dreaming of things that could make the world better. He had real responsibilities. He had tangible responsibilities and he had to live up to them, and he didn't appreciate it enough. And when he had the chance to stop Faiella, he should have. There's no question, and he didn't because it just was the mistake of a lifetime. But that's not him and that's why I think the aberrational part is the key. He's not looking to break the law. He's looking to do this the right way. He's sort of hitched his spiritual wagon to bitcoin."
Rakoff found merit in parts of this argument but refused to go as far as the defense requested. The judge called federal sentencing guidelines "ridiculous" yet determined that Shrem's conduct, sustained over months, warranted prison time as a deterrent to others.
"[Shrem] is immature, immature and impulsive, but not to the point that can be excused," Rakoff said. "This was not some kid making a one-time mistake. There's no question that Mr. Shrem, over a period of many months, was knowingly, willfully and to some extent excitedly, even passionately, involved in activity that he knew that, in part, was a serious violation of the law and that was promoting the evil business of trafficking in drugs."
Shrem's release comes with conditions. He must meet with his probation officer, submit to drug testing, and avoid committing serious crimes during his three-year supervisory period. The probation office may have imposed the restriction preventing him from speaking to media, though the sentencing record does not mention it.
Shrem addressed the court before Rakoff handed down his sentence, describing his devotion to cryptocurrency and his vision for bitcoin's future. "Bitcoin is what I love and all I have. It's my whole life. It's what I'm on this earth to do, is to help the world see a financial system that does not discriminate and provide for corruption," he said. "I think that bitcoin will do to money what e-mail did to the postal service. It allowed everyone to be equal. People in Africa, the Middle East, Asia, will have the same opportunities now with bitcoin, and because of this now, because you can move money instantly and information on a peer-to-peer system. And I think that's really important. And if your Honor grants me that, I'd love to be back out there helping the world and making sure people don't do stupid things like I did."
