Crypto’s early innovator turns compliance advocate: The Charlie Shrem Saga -TGN

Charlie Shrem — founder of fallen Bitcoin (BTC) exchange Bitshrem — has emerged as a voice for regulatory compliance after being jailed for crypto violations eight years ago.

The co-founder of the exchange is now a general partner at Druid Ventures, a startup crypto VC firm that provides growth and strategic advisory services.

“There are a lot of people struggling with the crypto-compliance beast and trying to sort it all out with their lawyers,” Shrem told the Wall Street Journal (WSJ). “That’s where I come in, to help them get their ducks lined up.”

After Bitshrem was founded in 2011, the company’s trading volume of the early Bitcoin investor increased in 2013 as the price of Bitcoin rose from around $100 to over $1000 by the end of the year. It then received a $1.5 million investment from Winklevoss Capital to help scale operations.

However, the ex-CEO was jailed in 2015 on charges of running an unlicensed money transfer company and for allegedly attempting to launder more than $1 million through the defunct darknet marketplace Silk Road. He was behind bars for two years.

Shrem said that while he didn’t expect to return to crypto after his time in prison, he was reconsidering how he could impact the industry by pushing it toward compliance. Byte Federal, for example, is a Bitcoin ATM operator that it says is proud to have encouraged to acquire a money transfer license.

While Lennart Lopin, co-founder of Byte Federal, does not recall receiving regulatory advice directly from Shrem, he acknowledged how Shrem’s personal story influenced his company’s motivation to pursue compliance. He said:

“[Shrem’s]arrest was one of the moments when everyone started to think that we live in an environment of rules and laws.”

Shrem said he ended up in jail because of his past aversion to compliance in general, but he’s learned his lesson now: “Even when you guys are little, you don’t want to be on the wrong side of things,” he said.

Crypto Rules Still Fuzzy

The crypto industry in the United States is still working on a clear set of rules – specifically around which coins qualify as securities and whether or not they can be listed on crypto exchanges.

The Securities and Exchange Commission (SEC) last month charged Binance and Coinbase with listing multiple unregistered securities, reportedly including BNB, Binance USD (BUSD), Solana (SOL), Cardano (ADA), and Polygon (MATIC).

Industry critics say the SEC has not provided clarity on how to know which cryptos are securities, nor has it provided a clear path for companies to register their securities products in the first place.

Crypto proponents are optimistic that the final ruling in SEC V. Ripple this month may have set a clear legal precedent for crypto companies. The judge of the case ruled that XRP itself is not a security, nor is the secondary market sale of the asset.