Bitcoin Billionaires

by Ben Mezrich

  In just a few short months since the twins had invested, Charlie had traveled the world, speaking to groups of Bitcoin fanboys in London, Paris, Tokyo, Berlin, and Tel Aviv. Bitcoin had opened up a life for him that he never knew existed, let alone that he could be a part of. It had made him a millionaire. And it had freed him from that brisket-soaked basement in Brooklyn—literally. Though in this, Bitcoin had had a bit of help, from a very unlikely source.

  A soft hand touched Charlie’s shoulder from behind the leather couch, and he turned just as an incredible-looking blond woman, way out of his league, leaned over and kissed him on his scruffy cheek. She was dressed like an EVR cocktail waitress, because that was her job, and was holding a tray of tequila shots, because shooting tequila at night was Charlie’s favorite activity—but this wasn’t some routine, sterile peck on the cheek because Charlie had ordered a round, or was a part owner, or was throwing twenties like confetti on New Year’s Eve.

  No, he and Courtney had been together for two months now. Charlie had fallen in love with her from the minute he’d first set eyes on her, just days after EVR had opened its doors. He’d asked Alex if she could always be his waitress, but even with this help, Charlie had been way too afraid to actually ask her out on a date. Despite his growing Bitcoin fame, he didn’t know how to talk to girls like Courtney. The night he’d gone out with Cameron and Tyler after that first meeting in the Bakery, when he’d met the Bulgarian model, had ended with him on a couch in Cameron’s apartment, alone, in vomit-soaked sneakers.

  He couldn’t have handled the same thing happening with Courtney. He’d fallen for her so hard, he’d spent more time thinking about her than about the overworked servers at BitInstant. Luckily for Charlie, his friends had taken charge of the situation by inviting them both to a staff happy hour and then collectively not showing up, leaving Charlie and Courtney alone, together.

  Out of sheer social terror, Charlie had signaled for a Bacardi. And he hadn’t stopped signaling until he’d consumed so much Bacardi that he’d thrown up all over Courtney. When he’d gone to the bathroom to clean himself up, he’d assumed she’d be racing for the door, but for some reason she’d stuck around. At that moment, Charlie had known she was the one.

  It wasn’t until their second date that he’d told her about “the Edict”—that he had a fundamentalist Jewish family that wouldn’t accept her, moreover, that being with her could actually lead him to being thrown out of his entire community, as insane as that sounded. And it wasn’t until another month later, when one of his sisters, overhearing him on the phone with Courtney, had squealed to his mother, that—everything at home had erupted. His mother crying and screaming, his dad actually ripping his shirt. After all of that came the ultimatum: the family or Courtney. Charlie hadn’t had any trouble making up his mind. He was in love, and more importantly, he was ready to get out. What had started with Roger Ver’s teasing about “sky people” had turned into a full-on, existential crisis, and Courtney had walked straight into that crisis with her tray of tequila.

  He’d packed his belongings, climbed out of the basement, and made a break to EVR, moving in with his college friends, to an apartment several of them shared that was literally above the club. He was opening up a new tab in the bar of life.

  “It’s after one,” Courtney whispered in his ear as she added the tray of shots to his table. “Don’t you have a meeting tomorrow morning?”

  “I always have a meeting tomorrow morning,” Charlie said.

  Then he reached for one of the shots. Sure, Courtney was probably right, adding tequila into the mix after 1:00 A.M. was never a great idea. But he wasn’t concerned about the meeting, even though he wasn’t exactly sure which meeting it was, or where, or with whom.

  He had to go to a lot of meetings. He was, after all, CEO. And customer service. And chief compliance officer. He handled just about everything except the departments that Voorhees and Ira ran, or the deep computer stuff, which Gareth still took care of from his own bat cave in Wales, or wherever the hell Gareth lived.

  With Voorhees and Ira, Charlie never had to worry; they were brilliant and professional, and had been instrumental in building BitInstant. In fact, they had developed some of the proprietary software that BitInstant was currently using, something that Ira had begun working on before BitInstant and that he and Voorhees had been letting Charlie use for free—a little fact that Charlie hadn’t yet mentioned to the Winklevoss twins, because he didn’t think it was that big a deal. Anyway, Voorhees and Ira were the glue keeping BitInstant together.

  They weren’t just part of his team, they were his friends, which these days to Charlie meant they were pretty much the only family he had. They were also both growing, just like he was.

  Voorhees was becoming as big of a name in Bitcoin as Charlie. Even though he ran BitInstant’s marketing, he was also working on a side project called SatoshiDice, a Bitcoin gambling website that was rapidly becoming a major draw in the Bitcoin community. The idea behind the game was simple: players sent bitcoin to an address that was either a winner or a loser. If “lucky,” they’d receive a multiple of the bitcoin they had wagered. If “unlucky,” they’d receive only a fraction. The game was instantly incredibly popular.

  Of course, since it was a gambling site, its legality for American customers was unclear. To Voorhees, this was a frustration both business-wise and philosophically speaking. He, of course, didn’t believe the government should be involved in regulating gambling, especially bitcoin gambling. The whole point of building SatoshiDice on the Bitcoin blockchain itself was to keep it far away from the hands of the U.S. government.

  For Charlie’s part, he couldn’t even begin trying to understand the U.S.’s byzantine gambling laws. In fact, he had only just recently started giving himself a crash course on U.S. money transmission laws—the exact laws that governed BitInstant’s business activities. He’d only done this after BitInstant’s lawyers and the Winklevoss twins had convinced him that it was critical for him to understand and comply with U.S. laws and regulations, not just for BitInstant’s sake, but for his own sake as well.

  Since Charlie was both the chief compliance officer and CEO of BitInstant, laws and regulations were something he knew he should be taking seriously; but details had never been his strong suit. Still, he was trying. In fact, he’d learned enough to know that even his wearing three hats—CEO, chief compliance officer, customer service—was itself a conflict of interest. And only recently, this tightrope act had gotten complicated.

  Someone with the handle BTCKing had been buying tons of bitcoin through the site with what appeared to be an endless supply of cash. As per the firm’s rules, for security reasons, because large Bitcoin transactions could, on their own, be considered suspect, and BitInstant didn’t have the resources to do deep-identity checks of their customers, BitInstant had capped regular customers’ daily purchase limits at $1,000—but it had become clear BTCKing was trying to evade those controls; on one single day, he’d attempted to purchase $4,000 worth of bitcoin, using a technique called “structuring.”

  Although it didn’t necessarily mean BTCKing was up to no good, it was an alarming attempt at circumventing BitInstant’s controls. When Charlie had discovered what had happened, he’d immediately banned BTCKing from using BitInstant, personally sending him an email: “We have all your deposits on record, your picture from bank security cameras. Any attempt at a new transfer will result in criminal prosecution.”

  But after much thought, Charlie had relented. After all, the guy had only been trying to buy more bitcoin. What was so bad about being eager? Wasn’t that good for everybody?

  Charlie had eventually messaged the guy back, reaffirming that his current account and email address had been banned, but that he could open up a new account with a new email address if he wanted.

  Charlie had no idea who BTCKing was. Most likely, he was a dealer or reseller, who bought bitcoin low and sold it to other people at a higher price. Charlie
didn’t really care, and furthermore, he didn’t really believe it was any of his business. And why should he worry about some random guy he’d never met, and probably never would meet? BTCKing? Even the name was a joke—everyone knew who the new, real King of Bitcoin was.

  In a few months, Charlie was going to be speaking at Bitcoin 2013, the same conference that the Winklevoss twins were keynoting. The twins might have been on page A1 of the New York Times, but Charlie had made it rain in front of a photographer in Bloomberg, and he was running the scene with his beautiful girlfriend at EVR.

  Charlie was a crypto rock star on his way up, and like the price of Bitcoin, he was never going to come back down.

  17

  THE MORNING AFTER

  “What is wrong with you?! Seriously, that was the most embarrassing thing I’ve ever sat through.”

  Cameron was doing his best to keep his voice down as he ushered Charlie through a marble lobby and toward the revolving glass doors leading onto Lexington Avenue. Tyler was on the other side of Charlie, helping prop him up as they made their way out. Even with identical six-foot-five-inch bookends escorting him on either side, Charlie was barely vertical, staring at his feet as if they were part of someone else’s body, struggling to put one foot in front of the other as he worked his way toward the lobby exit.

  The three of them hit the revolving door like a vaudeville act: Tyler through first, dragging Charlie into the same spinning wedge with him because there was a good chance that Charlie, if left on his own, would smash right through one of the panes of glass. Then Cameron, a wedge later, so consumed with his rising frustration that his breath was steaming up the glass in front of him.

  Once they were outside, Tyler led Charlie a few feet down the sidewalk toward Fifty-Ninth Street, then released the kid to prop himself up against the building on his own accord; the office lobby had given way to an oversized Gap, its plate glass windows teeming with mannequins in baggy sweats.

  “Charlie,” Cameron finally said as a passing group of suits moved far enough away that they hopefully couldn’t hear. “Did you even sleep last night?”

  Charlie finally looked up from his shoes. His eyes were wide, but still as bloodshot as they’d been since he’d arrived for the meeting on the seventeenth floor less than thirty minutes ago. His shirt was open three buttons—three goddamn buttons!—revealing a tangle of chest hair and the mottled skin of someone who had obviously spent the previous night in a club. Or maybe two. Hat trick? There were stains on his blazer, he reeked of alcohol, and if he’d slept at all, it had probably been on a floor.

  “You look like you’ve been on a five-day bender,” Tyler said.

  “No, really, just a few drinks, some tequila … nothing to worry about.…” Charlie’s voice trailed off into a mumble.

  Cameron tried again to control his emotions. He was usually the more empathetic one, but at that moment, he was having trouble feeling anything less than anger toward their boy wonder CEO. “Train wreck” would have been a grievous understatement to describe the meeting they’d just attended.

  “Do you know how hard it was to set that up?” Tyler asked. “John is one of the most powerful people in Fintech.”

  Fintech, a portmanteau of “Financial” and “Technology,” was the fastest-growing sector of venture investing in New York. It essentially included any new technology that had the potential to push the financial world forward, or make it more efficient, such as online banking, robo advisers, statistical consulting, quantitative investing, and of course, blockchain technology. And Tyler was right, John Abercrom, whose office they’d just fled like a circus troupe that had just murdered a member of their audience, and his VC firm, was one of the most influential names in the industry. John and his partners had built a portfolio of investments in over a hundred major companies, many of which were some of the most prominent in the world of Fintech.

  Through connections and hard legwork, Cameron and his brother had scored a meeting, only to unleash Charlie Shrem—in all his bloodshot and alcohol-drenched glory—on these titans of the industry.

  Before the meeting, from their email exchanges, it had seemed like John and his partners really understood Bitcoin and were genuinely interested in hearing Charlie’s pitch. But despite the warm audience, things had gone sideways from the moment Charlie had entered the room. Charlie had launched into his presentation like the Tasmanian devil. Swirling around in front of the whiteboard, he was literally all over the place. He’d been almost unintelligible, nonsensical. Speaking so fast, everyone in the room was getting whiplash. And all of it punctuated by jokes that fell completely flat; what might have landed in the wee hours of the morning at EVR hit like lead balloons in a boardroom on Lexington.

  When the conversation had shifted to the specifics of BitInstant’s model, Charlie had suddenly, bizarrely become defensive. The more technical things had gotten about BitInstant’s operations, compliance, and financials, the more Charlie had shut the questioning down. It was as if he had no interest in talking about the nuts and bolts of his own company. He was too busy playing the CEO of Bitcoin to be the CEO of BitInstant. And before Cameron or Tyler knew it, the meeting was over.

  “This can’t happen again,” Tyler said.

  “Was it really that bad?” Charlie stammered.

  “Worse. You weren’t just unprepared. You looked like you were on coke. Completely schizo.”

  “Schizo? That’s a good one. I like it.”

  “Charlie … I know you’ve got a lot of other responsibilities,” Cameron said.

  Like the nightclub, the cocktail waitress, the globetrotting.

  Cameron had talked to Tyler about this a dozen times already; lately, Charlie had been so swept up in the hype machine it was hard to even keep tabs on the guy. He seemed to be everywhere except where he was supposed to be—which is to say either sleeping or at the BitInstant offices working. The site had experienced brownouts twice in the last two weeks, which terrified Cameron. How safe was their investment, if the site kept buckling? What else was about to give? And how had things started to go south so fast?

  “But there is something you need to consider,” Tyler paused, his voice lower, “the people who start companies aren’t always the best people to run them.”

  Charlie seemed to suddenly sober up, at least enough to understand what Tyler was saying.

  “Are you saying that someone else should be CEO?”

  It was the first time either of the twins had floated the thought aloud. Charlie had a ton of great ideas, a ton of energy, but did he have the consistency to run a real company? The type of company BitInstant was fast becoming? In a way, Voorhees and Ira weren’t helping matters; they both being incredibly competent was only enabling Charlie, enhancing his worst attributes.

  Charlie looked from Tyler to Cameron, craning his neck to match their eyes.

  “Maybe Roger is right about you guys.”

  “What the hell does that mean?” Cameron said.

  A pair of German tourists moved past, close enough for one of them, a young man with a shock of moussed yellow hair, to recognize the twins and point. The man’s partner, a woman in a denim dress, pointed her cell phone at Cameron, took a quick picture, then kept walking. This type of thing happened almost every day.

  “I mean,” Charlie continued, “sometimes you guys can be such suits.”

  Cameron rolled his eyes. Sometimes suits were necessary. Certainly, they were appropriate at a meeting with one of the biggest names in Fintech.

  “As we’ve told you before,” Tyler said, still moderately controlled, “Roger isn’t the best influence.”

  Although the twins had avoided meeting with Ver in person in San Jose, they’d been cc’d on numerous emails—and had eventually taken part in multiple hour-long phone conversations with Ver over the past few weeks, discussing BitInstant’s future. It seemed the more successful the company got, the more friction they and the Tokyo libertarian had. Lately, a lot of the conversation
s had focused on Charlie’s increasing absence from the office. No matter what, regardless of the topic or the set of facts and circumstances, Ver always defended Charlie, even when it meant doing so was to a fault. He’d probably find a way to defend Charlie about the nightmare of a meeting they’d just had too. Cameron could already hear Ver in his head, rationalizing how it was healthy for entrepreneurs to blow off steam.

  “He’s been supporting me since the beginning,” Charlie said.

  “It’s no longer the beginning,” Cameron shot back, “it’s the now. The stakes are real, you can’t be taking advice from an ex-con.”

  Charlie pressed his hands flat against the window behind him, leaving a sweat stain on the glass.

  “He went to jail for selling pest control,” Charlie said.

  “Explosives,” Cameron corrected. “He’s the kind of guy who likes blowing things up.”

  “You don’t know him. He really does want to change the world. Change the government.”

  “He wants to change the government because he hates the government. It’s not some noble, philosophical cause. It’s a personal grudge.”

  Was Charlie really trying to defend Roger’s conviction? The same Charlie who was espousing the importance of compliance, inside the walls of a major U.S. bank, just weeks ago?

  “You don’t know him,” Charlie sputtered.