BitInstant
| Industry | Bitcoin payment / exchange funding service |
| Founded | 2011 |
| Defunct | about July 2013 |
| Headquarters | New York City |
| Founder(s) | Gareth Nelson, Charlie Shrem |
BitInstant was a New York–based service that let customers fund bitcoin exchange accounts and related destinations with cash and other rails faster than many bank transfers of the period. Founders Gareth Nelson and Charlie Shrem announced the project in media coverage dated 23 August 2011.[1] It offered U.S. cash deposits at retail locations, Dwolla, and redeemable codes from Mt. Gox, Bitstamp, and BTC-e, with destinations that included those exchanges, VirWoX, e-mail or bitcoin address delivery via Coinapult, and fees that started near 0.26% and varied by route.
History
BitInstant was based in New York City with a United Kingdom office. On 16 April 2012 the service began offering Coinapult as a destination so cash deposits could be claimed by e-mail or SMS.[2] On 5 June 2012 it launched an integration with the BitcoinSpinner mobile app.[3]
According to U.S. Attorney materials for the Southern District of New York, BitInstant ceased operating about July 2013. Charlie Shrem was Chief Executive Officer and, from about August 2011 until that cessation, Compliance Officer responsible for anti-money laundering compliance.[4][5]
Plea and sentencing
On 4 September 2014, before U.S. District Judge Jed S. Rakoff in the Southern District of New York, Shrem pleaded guilty to aiding and abetting an unlicensed money-transmitting business operated by Robert M. Faiella (also known as BTCKing) in connection with bitcoin sales tied to Silk Road drug trafficking. The same release states Faiella pleaded guilty to operating an unlicensed money-transmitting business. Shrem's plea count carried a statutory maximum of five years.[4]
On 19 December 2014 Judge Rakoff sentenced Shrem to two years in prison, three years of supervised release, and forfeiture of $950,000 representing funds involved in the offense that were intended to promote illegal activity. The U.S. Attorney identified Shrem as former CEO and Compliance Officer of BitInstant and former Vice Chairman of the Bitcoin Foundation, and stated that BitInstant ceased operating about July 2013.[5]