BitInstant

Last updated
BitInstant
Founded2011 (2011)
FounderGareth Nelson
Charlie Shrem
Defunct2014 (2014)
Headquarters New York City
Websitehttp://www.bitinstant.com/ (defunct)

BitInstant was a bitcoin exchange start-up based in New York City. [1] [2] Founded in 2011 by Gareth Nelson and Charlie Shrem, BitInstant provided a means to pay traditional funds rapidly to bitcoin exchanges.[ citation needed ]

Bitcoin (₿) is a cryptocurrency. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.

A startup or start up is a company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model. Hence, the concepts of startups and entrepreneurship are similar. However, entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to grow big or become registered, while startups refer to new businesses that intend to grow beyond the solo founder, have employees, and intend to grow large. Start ups face high uncertainty and do have high rates of failure, but the minority that go on to be successful companies have the potential to become large and influential. Some startups become unicorns, i.e. privately held startup companies valued at over US$1 billion.

New York City Largest city in the United States

The City of New York, usually called either New York City (NYC) or simply New York (NY), is the most populous city in the United States. With an estimated 2018 population of 8,398,748 distributed over a land area of about 302.6 square miles (784 km2), New York is also the most densely populated major city in the United States. Located at the southern tip of the state of New York, the city is the center of the New York metropolitan area, the largest metropolitan area in the world by urban landmass and one of the world's most populous megacities, with an estimated 19,979,477 people in its 2018 Metropolitan Statistical Area and 22,679,948 residents in its Combined Statistical Area. A global power city, New York City has been described as the cultural, financial, and media capital of the world, and exerts a significant impact upon commerce, entertainment, research, technology, education, politics, tourism, art, fashion, and sports. The city's fast pace has inspired the term New York minute. Home to the headquarters of the United Nations, New York is an important center for international diplomacy.

Contents

As of January 2014, BitInstant's website is no longer available, displaying only a blank page. [1] Its blog was unavailable as of October 31, 2014.

History

BitInstant was founded in 2011 by Gareth Nelson and Charlie Shrem. The company allowed its customers to purchase the bitcoins via more than 700,000 stores, including Walmart, Walgreens, and Duane Reade. [3]

Charlie Shrem American entrepreneur

Charles Shrem IV is an American entrepreneur and bitcoin advocate. In 2011 he co-founded the now-defunct startup company BitInstant, and is a founding member of the Bitcoin Foundation, formerly serving as vice chairman. In December 2014 he was sentenced to two years in prison for aiding and abetting the operation of an unlicensed money-transmitting business related to the Silk Road marketplace. He was released from prison around June 2016. In 2017, he joined Jaxx as its director of business and community development. Later that year, he founded cryptocurrency advisory CryptoIQ.

Walmart U.S.-based multinational discount retailer based in Arkansas

Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, headquartered in Bentonville, Arkansas. The company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. It also owns and operates Sam's Club retail warehouses. As of July 31, 2019, Walmart has 11,389 stores and clubs in 27 countries, operating under 55 different names. The company operates under the name Walmart in the United States and Canada, as Walmart de México y Centroamérica in Mexico and Central America, as Asda in the United Kingdom, as the Seiyu Group in Japan, and as Best Price in India. It has wholly owned operations in Argentina, Chile, Canada, and South Africa. Since August 2018, Walmart only holds a minority stake in Walmart Brasil, which was renamed Grupo Big in August 2019, with 20 percent of the company's shares, and private equity firm Advent International holding 80 percent ownership of the company.

Walgreens second-largest pharmacy store chain in the United States

Walgreen Company or simply Walgreens is an American company that operates as the second-largest pharmacy store chain in the United States behind CVS Health. It specializes in filling prescriptions, health and wellness products, health information, and photo services. As of August 31, 2018, the company operated 9,560 stores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. It was founded in Chicago, Illinois, in 1901. The Walgreens headquarters office is in the Chicago suburb of Deerfield, Illinois.

In September 2012, when presidential candidate Mitt Romney was threatened with blackmail unless he paid an anonymous group $1 million in bitcoin, BitInstant's Erik Voorhees offered to purchase the bitcoin for him without a fee.

Mitt Romney United States Senator from Utah

Willard Mitt Romney is an American politician and businessman serving as the junior United States senator from Utah since January 2019. He previously served as the 70th Governor of Massachusetts from 2003 to 2007 and was the Republican Party's nominee for President of the United States in the 2012 election.

Blackmail is an act of coercion using the threat of revealing or publicizing either substantially true or false information about a person or people unless certain demands are met. It is often damaging information, and may be revealed to family members or associates rather than to the general public. It may involve using threats of physical, mental or emotional harm, or of criminal prosecution, against the victim or someone close to the victim. It is normally carried out for personal gain, most commonly of position, money, or property.

Erik Tristan Voorhees is an American startup founder. He is co-founder of the bitcoin company Coinapult, worked as Director of Marketing at BitInstant, and was founder and partial owner of the bitcoin gambling website Satoshi Dice.

According to Shrem, transaction volume grew rapidly during 2013 as the price of bitcoin rose, and "basically tripled" during April. [4]

As of May 2013, BitInstant had 16 employees when Winklevoss Capital invested $1.5 million in the company. [2] According to the Winklevosses, the funding is "meant to allow the company to further scale up its staff and product." BitInstant later announced a partnership with the Winklevosses' bitcoin investment fund.

Winklevoss Capital Management

Winklevoss Capital is a family office founded in 2012 by Tyler Winklevoss and Cameron Winklevoss. The firm invests across multiple asset classes with an emphasis on providing seed funding and infrastructure to early-stage startups. The company is headquartered in New York’s Flatiron District.

In June 2013, BitInstant announced integration with Jumio, an online payment company led by Daniel Mattes. Jumio's Netverify software allows BitInstant to verify customers' identity. BitInstant also restricted bitcoin transactions in some states, stating that "We have temporarily limited transactions in some locations, and we apologize for the inconvenience. We believe that these measures are vital to serving the interests of both BitInstant and the greater bitcoin community."

In July 2013, BitInstant suspended services, saying it wanted "to improve the code based on trends they noticed" in nearly 17,300 customer service complaints. Several days earlier, a class action lawsuit had been filed on behalf of customers, claiming failure to perform services and false representation. [5]

On January 27, 2014, company CEO Charlie Shrem was arrested at New York's JFK airport and charged with "conspiring to commit money laundering by selling more than $1 million in bitcoins to users of the black market website Silk Road..." [6] He was convicted and in December 2014 sentenced to two years in prison. [7] The BitInstant website has been blank since 2014.

Criticism

BitInstant received many complaints from customers concerning transaction processing delays, sometimes of several days. [4]

Also in June 2013 the New York State Department of Financial Services issued a warning letter to BitInstant, asking it to comply with regulations governing money transmission businesses. [8]

Related Research Articles

Money laundering Process of transforming profits of crime and corruption into ostensibly legitimate assets

Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. The overall scheme of this process returns the money to the launderer in an obscure and indirect way.

Cryptocurrency exchange

A cryptocurrency exchange or a digital currency exchange (DCE) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. A cryptocurrency exchange can be a market maker that typically takes the bid-ask spreads as a transaction commission for is service or, as a matching platform, simply charges fees.

Winklevoss twins American entrepreneurs

Cameron and Tyler Winklevoss were born August 21, 1981 and are identical twin brothers, known as the Winklevoss twins. The brothers were American rowers and are Internet entrepreneurs. They competed in the men's pair rowing event at the 2008 Beijing Olympics and co-founded HarvardConnection, later renamed ConnectU, with Harvard University classmate Divya Narendra. In 2008, the Winklevoss brothers settled for $65 million in a case where they sued Facebook founder Mark Zuckerberg for stealing their ConnectU idea to create Facebook back in 2004.

Cryptocurrency digital medium of exchange

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The Bitcoin Foundation is an American nonprofit corporation. It was founded in September 2012 in order to try to restore the reputation of bitcoin after several scandals, and to try to promote its development and uptake. The organization was modeled on the Linux Foundation and is funded mainly through grants made by for-profit companies that depend on the bitcoin technology.

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Bitcoin network peer-to-peer payment network that operates on a cryptographic protocol

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History of bitcoin

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<i>Banking on Bitcoin</i> 2016 documentary film by Christopher Cannucciari

Banking on Bitcoin is a 2016 documentary about the beginnings of bitcoin and how it evolved to be what it is today. The film was directed by Christopher Cannucciari. The film starred many early adopters of bitcoin, including Charlie Shrem, Erik Voorhees, Gavin Andresen, David Chaum, and the Winklevoss twins. Banking on Bitcoin was released on Netflix and provided many people with an introduction and overview into the cryptocurrency world. The official soundtrack was composed and produced by Ben Prunty.

References

  1. 1 2 Lee, Timothy B. "Feds charge Bitcoin start-up founder with money laundering". Washingtonpost.com. Retrieved 2014-01-28.
  2. 1 2 Taylor, Colleen (17 May 2013). "With $1.5M Led By Winklevoss Capital, BitInstant Aims To Be The Go-To Site To Buy And Sell Bitcoins". TechCrunch. Retrieved 11 July 2013.
  3. ↑ Alexa Simon (2013-04-10). "Meet the Bitcoin Millionaires". Businessweek. Retrieved 2014-01-28.
  4. 1 2 Roose, Kevin (8 April 2013). "Inside the Bitcoin Bubble: A Q&A With BitInstant's Stressed-Out CEO". New York Magazine. Retrieved 11 July 2013.
  5. ↑ Iacono et al. v. BitInstant LLC, Case 1:13-cv-04674-CM (S.D.N.Y.8 July 2013).
  6. ↑ "Bitcoin Operators Charged in Illicit Drug Site Bust". Associated Press. Retrieved 27 January 2014.
  7. ↑ Nate Raymond (19 December 2014). "Bitcoin backer gets two years prison for illicit transfers". Reuters. Thompson Reuters. Retrieved 20 December 2014.
  8. ↑ Sidel, Robin (25 June 2013). "States Put Heat on Bitcoin". The Wall Street Journal. Retrieved 11 July 2013.
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