Winklevoss lawsuit against Charlie Shrem may be stuck in neutral | A look at decentralized insurance platforms

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“[Winklevoss Capital Fund’s] case collapses on itself because those 5,000 bitcoins were not owned by Shrem. The scandalous and fantastical story WCF is advancing is nonsense.” — From Charlie Shrem’s legal filing in Winklevoss Capital Fund v. Charles Shrem

The Big Block

The Winklevoss lawsuit against Charlie Shrem provides some gossipy insights about early bitcoin adopters set against a backdrop of dry Dickensian procedural minutiae and sharp elbows. It’s also a lesson in tactics — if your first salvo in litigation is to shoot your heavy artillery, you better think ahead to what will happen if you miss your target.

A little bit of background, taken from the lawsuit. The plaintiff here is Winklevoss Capital Fund, LLC, not the Winklevoss brothers personally. At issue is $61,000 — no, I am not missing a zero — which Winklevoss (again, the firm not the twins) says should have been used to buy bitcoin on its behalf. But — and here’s the heart of the claim — Shrem allegedly used it to buy bitcoin for himself. The lawsuit was filed secretly on September 11, 2018, but only unsealed on October 26, 2018 (more on that below).

Plaintiff alleges that in 2012/2013, it gave Charlie Shrem $750,000 to buy bitcoin. They say of that total amount he took $61,000 for himself and used that to buy 5,000 bitcoin, which he kept. Using blockchain records, plaintiffs pointed to a transaction on the Bitcoin blockchain on December 31, 2012. They say is shows that particular amount of bitcoin being transferred to an address they allege was controlled by Shrem. (As you will see below, Shrem disputes this). 

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