The case against Bitcoin Foundation founder Charlie Shrem by Tyler and Cameron Winklevoss has taken a new twist after federal Judge Jed Rakoff ordered for the unfreezing of Shrem’s assets.
The previous court order directed the freezing of Shrem’s finances held with cryptocurrency companies such as Coinbase, Xapo and banking institutions.
The amount frozen was about $32 million, equal to what the Winklevoss twins seek in compensation for their 5,000 alleged stolen Bitcoins.
The dispute between Shrem and the Winklevosses goes back to 2012 when they gave Shrem $250,000 to invest in Bitcoin for them.
The twins later alleged that Shrem only delivered Bitcoin worth $189,000 and retained the remaining $61,000.
That was equal to 5,000 Bitcoins, with a current value of approximately $32 million.
The recent order by Judge Rakoff read that the court denies the complainant’s motion to enforce the attachment order, and therefore lifts the order, effective immediately.
The court order explained that the asset freeze was an unnecessary step for the preliminary hearings.
Shrem’s Recent Activities
Cameron and Tyler Winklevoss filed the suit against Shrem last month, in spite of his recent spending spree and extravagance.
Shrem recently acquired a $2 million property in Florida, together with several Maseratis and yachts.
This raised suspicion among the twins, who said in their lawsuit that either Shrem had been very lucky after leaving prison, or had acquired the new holdings with money from the appreciated value of the 5,000 Bitcoins he allegedly stole.
The twins said that they engaged the services of a private investigator in 2013, who found that the missing Bitcoins were being held in several wallets owned by Shrem.
The brothers say that the amount has since been redirected to other accounts.
The Case Arguments
Shrem and his lawyer, Brian Klein, have been fighting the lawsuit vehemently.
In a podcast interview from 2017, Shrem said that he went to prison penniless and that he worked as a dishwasher for some time before trying his hand at Bitcoin again. Shrem and his lawyer call this latest court order the first step to complete acquittal.
Klein argued that the Winklevoss case is based on a false premise that Shrem stole 5,000 Bitcoins of the Winklevoss Capital Fund, moved the Bitcoins around in December 2012 and later reclaimed them after he was released from prison.
Thus, the lawyer claims that the Winklevoss case doesn’t hold water because Shrem does not own the Bitcoins.
Klein further explained that the 5,000 Bitcoins in possession of Shrem is owned by a separate prominent party whom they didn’t disclose.
The lawyer referred to the party as a “Mr. X” and presented email threads between Shrem and Mr. X discussing the 5,000 BTC.
Shrem’s lawyer said that the application by the Winklevosses to freeze his assets was equivalent to a money grab aimed at crippling him financially.
Klein further noted that the twins had not provided any substantial evidence of a direct attempt by Shrem to defraud them.
A formal trial for this case is scheduled for April 8, 2019.