Crypto Stories: Charlie Shrem tells how he became a Bitcoin millionaire

cointelegraph.com:

Charlie Shrem went from running a small online business to becoming a Bitcoin (BTC) millionaire and making the cover of Forbes magazine. And then he went to prison.

In the latest episode of Cointelegraph’s Crypto Stories, Shrem tells the story of how he founded BitInstant, grew it into a multimillion-dollar Bitcoin empire, and then was arrested for his role in it.

Shrem’s first business was an e-commerce site that only charged $5 shipping per item. The idea was his cousin’s, but Shrem used his coding skills to create the actual site. The business sold lights, toothbrushes, razors and other assorted items.

In his free time, Shrem hung out on online message boards. That’s where he found out about Bitcoin. At the time, the only way to buy Bitcoin was to wire transfer large amounts of funds to Mt. Gox, and it took a week for the deposit to clear within the banking system. A customer who wanted to buy smaller amounts or wanted to buy instantly had no way of doing so.

Shrem met up with a person in one of these forums named “Gareth,” and the two started a business that would allow people to buy or sell Bitcoin instantly. Their company was called BitInstant. To allow for instant purchases, the company deposited money into Mt. Gox and purchased Bitcoin with it. They then sold this Bitcoin off in smaller amounts to various customers.

But Shrem and his partner ran into a problem. As their transaction volume grew, they needed more and more cash to deposit into Mt. Gox, and their capital was running out quickly, as Shrem explained:

The two entrepreneurs met Roger Ver, who helped them with a $100,000 capital injection to continue scaling the business. Ver also suggested the team hire Erik Voorhees. Later, Voorhees and Shrem ran across David