Image credit: Flickr/cellanr

Winkelvoss twins want 'sheriff' for virtual currency 'wild west'

The chisel-jawed brothers invested in a Bitcoin company whose founder has been charged with money laundering. They ain't no cowboys...

by Rachel Savage
Last Updated: 04 Jun 2014

The Winkelvii – the jock-tastically wealthy twins of 'many Mark Zuckerberg-related lawsuits' fame – have a lot riding on virtual currency Bitcoin. Over $86m (£52m), in fact.
 
But their reputations - as well as their fortunes - could be feeling pretty sore soon. Charlie Shrem, the 24-year-old founder of BitInstant, the Bitcoin exchange they backed, was arrested at New York’s JFK airport on Sunday and charged with money laundering and funneling Bitcoins to now-defunct online drugs marketplace Silk Road.
 
While Tyler Winkelvoss (Tweedledum) tried to brush off Shrem’s arrest as a ‘speedbump’ for Bitcoin, and Cameron (Tweedledee) claimed anti-money laundering rules for virtual currencies weren’t clear when they first bought up Bitcoins back in 2012, the twins know they’re in a tight spot.
 
Their solution? A ‘sheriff’ to police the ‘wild, wild west’ of virtual currencies.
 
‘No one would deny it was the wild, wild west," Cameron said at a New York financial services department hearing yesterday on whether to regulate virtual currencies. "The wild west attracts cowboys, and I don’t think anybody here would deny a sheriff would be a good thing.’
 
Bitcoins are pretty controversial – the European Banking Authority has warned of the risks, Bob Geldof thinks they won’t work, and Nobel Prize-winning economist Paul Krugman has called them ‘evil’ (before more reasonably explaining that he doesn’t think virtual currencies are a reliable source of value).
 
The most obvious sticking point for this ragtag collection of doom-mongers, and the source of its appeal, is that Bitcoin doesn’t need a government to exist – only the internet (hence its potential and actual uses for drugs etc). So for the Winkelvii to support virtual currency regulation in front of a government committee is, we would suggest, on the happy side of hypocritical.
 
The twins have made at least $70m from Bitcoins (the pair bought into the currency when a coin cost less than $10), and led a $1.5m funding round for Shrem’s BitInstant in autumn 2012. So they won’t want to part with their baby and see their investment vehicle Winkelvoss Capital doomed just yet, or get embroiled in more lawsuits (after years of trying to squeeze money from Mark Zuckerberg).
 
MT would suggest the ex-Harvard, Oxford and Team USA rowers vet their investments a bit carefully next time: Shrem is also being accused of buying a whole load of marijuana brownies off Silk Road. A little too '18-year-old stoner' for our comfort...

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