BitInstant

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BitInstant
BitInstant logo.png
Headquarters New York City
Founder(s) Gareth Nelson and Charlie Shrem
Website Official website
Launched 2011

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 rapidly pay traditional funds to bitcoin exchanges.[3] As of January 2014, BitInstant's website is no longer available, displaying only a blank page.[1] Its blog, at [1] was unavailable as of October 31st, 2014.

History[edit]

BitInstant was founded in 2011 by Gareth Nelson and Charlie Shrem.[3] The company allowed its customers to purchase the bitcoins via more than 700,000 stores, including Walmart, Walgreens, and Duane Reade.[4]

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.[5]

According to Shrem, transaction volume grew rapidly during 2013 as the price of Bitcoin rose, and "basically tripled" during April.[6]

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.[7]

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.[8] 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.".[9]

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. [10] Several days earlier, a class action lawsuit had been filed on behalf of customers, claiming failure to perform services and false representation.[11]

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...”.[12] BitInstant website has been blank since then.

Criticism[edit]

BitInstant received many complaints from customers concerning transaction processing delays sometimes of several days.[6][13] In response to complaints, BitInstant CTO Gareth Nelson stated that "we are all stressing out and working day and night (literally) to get things fixed and hope to have a proper resolution for the backlogged orders".[13]

The New York State Department of Financial Services issued a warning letter to BitInstant, asking it to comply with regulations governing money transmission businesses.[14]

References[edit]

  1. ^ a b Lee, Timothy B. "Feds charge Bitcoin start-up founder with money laundering". Washingtonpost.com. Retrieved 2014-01-28. 
  2. ^ a b 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. ^ a b Emily Spaven (2013-08-15). "Frustrated customers hit BitInstant with a class action lawsuit". Coindesk.com. Retrieved 2014-01-07. 
  4. ^ Alexa Simon (2013-04-10). "Meet the Bitcoin Millionaires". Businessweek. Retrieved 2014-01-28. 
  5. ^ Garver, Abe (7 September 2012). "BitInstant To Romney Camp: 'We'll Convert $1,000,000 USD to Bitcoin For Free.'". Forbes. Retrieved 12 July 2013. 
  6. ^ a b 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. 
  7. ^ Gilson, David (8 July 2013). "BitInstant to partner up with Winklevoss twins’ bitcoin fund". CoinDesk. Retrieved 11 July 2013. 
  8. ^ Jumio June 13, 2013 8:00 AM (2013-06-13). "Bitcoin Purchase Platform BitInstant Integrates Jumio's Netverify to Speed Transactions and Reduce Fraud - Yahoo Finance". Finance.yahoo.com. Retrieved 2014-01-07. 
  9. ^ "Squarespace - Account Not Available". Blog.bitinstant.com. Retrieved 2014-01-07. 
  10. ^ "BitInstant website". 15 July 2013. Retrieved 29 July 2013. 
  11. ^ Iacono et al. v. BitInstant LLC, Case 1:13-cv-04674-CM (S.D.N.Y. 8 July 2013).
  12. ^ "Bitcoin Operators Charged in Illicit Drug Site Bust". Associated Press. Retrieved 27 January 2014. 
  13. ^ a b Siluk, Shirley (13 June 2013). "BitInstant complaints flare up after beta site launch". CoinDesk. Retrieved 11 July 2013. 
  14. ^ Sidel, Robin (25 June 2013). "States Put Heat on Bitcoin". The Wall Street Journal. Retrieved 11 July 2013. 

External links[edit]