“Money laundering.” Cameron was reading off his computer as Tyler hovered behind him. “Computer hacking, conspiracy to traffic narcotics, and procuring murder.”
Tyler leaned over his shoulder to stare at the screen.
“Procuring murder?”
“Apparently he tried to hire two hit men who turned out to be undercover FBI agents. Assassins for hire …”
“That’s so dark.”
Cameron leaned back from the computer, then looked out over the bustling office that was now Winklevoss Capital. So many people, and almost all of them under the age of thirty, recent grads from Harvard, Yale, Columbia, NYU, Berkeley, Stanford, and so on. All of them eager to be there, gravitating toward the twins as they worked to turn Bitcoin into something respectable. And up until today, fighting that fight had meant Silk Road was hanging around their neck every day like a drug-addled albatross. And now suddenly, just like that, it was gone: cooked, just like Ross Ulbricht, the twenty-nine-year-old who had been IDed as the mogul behind the biggest illegal drug bazaar in history.
“Dread Pirate Roberts is going to jail.”
Dread Pirate Roberts was the online name Ulbricht had given himself, after the Cary Elwes character in the movie The Princess Bride. In the movie, he’s a mythic character who, it turned out, is actually multiple pirates, the name being handed down from generation to generation.
Ulbricht would later claim that he hadn’t created Silk Road, that, like Westley the farm boy in the movie, he’d inherited the title from someone else. In fact, one of the potential names that the blogosphere theorized as the possible true creator of Silk Road was Mark Karpeles, the Mt. Gox CEO. But the FBI disagreed, and it seemed as if they had gathered enough evidence to convict Ulbricht. With all the charges against him, he was looking at facing the rest of his life behind bars. The FBI was claiming that by running a website over which a billion dollars of drugs was bought and sold, Ulbricht had become one of the biggest drug kingpins in history. Although Ulbricht could argue that by running a website, he was merely a software provider, which didn’t make him responsible for what was sold on that site—Amazon, eBay, and plenty of other sites had seen illegal items sold on them many times over—it would be, in the end, a hard argument to win in front of a jury. For one thing, it was unlikely that any jury did not include at least one person who cared for or knew someone whose life was ravaged by an opioid addiction. Pills like oxycodone seamlessly changed hands in bulk over Silk Road every day. Dread Pirate Roberts knew exactly what his marketplace was selling and had continually argued in his own writings that he was proud of the niche Silk Road filled. In fact, he wasn’t just the site’s operator, if the feds were to be believed, but he had also tried to hire hit men over the site—he was one of its customers.
No matter what the results of the eventual trial might be, the site was finished, and the news was going to reverberate through the Bitcoin economy.
“It’s already dropping,” Tyler said as he reached past Cameron to the mouse next to his computer. “It’s dropping fast.”
The price of a single bitcoin had started the morning at around $145 a coin, but since the news of Ulbricht’s arrest, the price had begun to spiral downward. Now it was approaching $110 per coin. That meant the economy had shed more than $700 million in value in just a matter of hours. The twins themselves had lost millions of dollars on paper; but Cameron kept his mind on the bigger picture.
The twins’ own research had shown that Silk Road did not dominate the Bitcoin market, as some breathless observers in the press had proclaimed. Silk Road was in truth a small fraction of the Bitcoin economy, even though it was the fodder for many juicy headlines. The brothers’ thesis was any drop in the price of bitcoin due to the Silk Road closure was sure to correct. And, of course, as far as the twins were concerned, the death of Silk Road was very good news for Bitcoin’s future legitimacy.
“There’s only one thing to do,” Cameron said.
“Buy!”
Cameron opened his computer and started to type furiously. Even though it was risky, he always kept cash—dry powder—on Mt. Gox and some newer exchanges that had popped up in anticipation of buying opportunities such as this one.
His phone began to ring.
“It’s Charlie again.”
Over the past few weeks, Charlie Shrem had been calling them both nonstop, but he’d been particularly persistent with Cameron, who had always had more of a soft spot for him, sometimes leaving Cameron three messages in a day.
It was only days after he and Tyler had received the email from Charlie promising a new start (and failing to mention any clouds on the horizon) that BitInstant had suddenly shut down. The loss of BitInstant’s licenses, which designated the company as a legal money transmitter, had been insurmountable, and Charlie had done the only thing he could, shuttering BitInstant’s doors. But he had kept the twins in the dark until the last moment, and that’s what they couldn’t forgive. He had posted some nonsense online, that it was just a temporary suspension of business to revamp and refit, that BitInstant would soon return better than before. But Cameron knew that Charlie’s message to customers was as untrue as his previous email had been. BitInstant wasn’t coming back.
To actually revamp, he’d need new money transmission licenses, he’d need a new banking partner, and most of all, he’d need cash, lots of it, because he’d burned through everything the twins had given him, including the $500,000 bridge “loan” that had still never been paid back.
Cameron and Tyler had begun the process of mentally separating themselves from Charlie. If he treated his partners that way, withholding the shutdown of the site, what else wasn’t he telling them and how else was he behaving? Failure was okay, it was part of the game they signed up for and the odds they chose to play. One in twenty startup investments succeeded, according to the numbers. But Charlie’s behavior, in their minds, bordered on bad faith and a dereliction of duty—he had checked out, run the other way instead of diving headlong into fixing BitInstant. Traveling more, partying more, drinking and smoking day and night. Instead of warning the twins that bad news was coming, he had kept looking for a lifeline, asking them to chase bad money with good.
No doubt, that’s why he had been calling now. But the spigot was dry: they were finally ready to write BitInstant off as a learning experience and walk away.
Cameron would likely have ignored this call too, but with the news of Silk Road still open on his computer, he decided to give Charlie a few minutes—if only to feed his own curiosity. After all, Charlie was close to Ver, and Cameron wanted to know what Ver thought about the death of Silk Road.
“He thinks it’s a travesty,” Charlie said. He sounded out of breath, like he was running in place. “He thinks Ulbricht is being railroaded.”
Cameron should have suspected as much. Of course Ver was going to join the other ultraradical libertarians on the internet and try to turn Ulbricht into a martyr. In fact years later, in March of 2016, after Ulbricht’s sentencing and imprisonment for double life in prison plus forty years, Ver would go even further in an open letter to the former “Dread Pirate Roberts”:
I suspect you will go down in history in a similar spot to Harriet Tubman for helping slaves escape their slave masters. By creating the Silk Road you have helped millions of peaceful drug users escape their violent oppressors in the form of the police, DEA, FBI, and judges who lock peaceful people in prison like yourself.…
“I don’t know what’s scarier, Ver’s views, or the fact that you consider him a mentor,” Cameron said.
As often, his brother took a harder line with Charlie. “And look where he’s gotten you. BitInstant is closed because you never really gave a damn about licensing and you were too busy buying into Ver’s bullshit.”
“I believe in compliance,” Charlie said over the phone. “Guys, we can fix this!”
“We aren’t interested in your circus anymore,” Tyler continued. “We’re interested in minimizing the damage at this point. Starting with our five hundred thousand dollars.”
There was a pause on the other end of the line. Cameron wasn’t sure how Charlie thought this conversation was going to go, but it was obvious he’d put the money out of his mind long ago.
“It’s … tied up, it’s not possible.”
“Tied up? What do you mean? That loan was earmarked for working capital, not operating expenses.”
“Three out of every ten people who own bitcoin bought it through me,” Charlie said, trying to divert the conversation. “BitInstant can come back. We just need a new license. We still have thousands of people who want to buy through us.”
“Nobody is going to give you a license. This isn’t a game anymore. It’s fine to sit in Panama and gripe about the evil government, but in the U.S., if you don’t play by the rules, you end up in handcuffs. That’s the way this works. And that’s the way it’s supposed to work.”
The conference room phone started lighting up. Cameron put Charlie on hold and answered it.
It was their chief of staff, Beth Kurteson. Beth was a midwestern transplant who had come to New York City from Illinois for college and then later Columbia Business School for her master’s in business administration. She was the first person the twins had ever hired. She was smart, hardworking, and had extremely high integrity and emotional IQ. She had quickly become one of the twins’ most trusted and relied-upon team members.
“I’ve got the WSJ on three. Bloomberg on four. The Financial Times on five.”
Cameron felt his cheeks growing cold. Could they all be calling to ask about Silk Road? That didn’t seem likely; the twins had no connection to the site.
“Put us into the Journal,” Cameron finally said. “Might as well start at the top.”
The reporter didn’t waste much time with pleasantries. “Guys, do you have any comment about the subpoena?”
The question was completely out of left field. Cameron pressed the mute button, looking at Tyler.
“What the hell is he talking about?”
Tyler unmuted the line.
“What subpoena?” he asked into the phone. “Who’s being subpoenaed?”
There was a brief pause on the other end of the line.
“You are.”
Cameron’s heart pounded in his chest as he stared at the conference room phone, lit up like the Christmas tree in Rockefeller Center. He had completely forgotten that Charlie was still on hold on his cell phone lying on the table.
Cameron and Tyler Winklevoss had just been subpoenaed by the superintendent of the New York State Department of Financial Services, New York State’s bank and insurance regulator.
Their dance with Charlies Shrem might be over, but the battle for Bitcoin had just begun.