New York State Department of Financial Services grants Gemini Trust Co. , the Winklevosses Bitcoin exchange, a limited liability trust charter, holding it to the regulatory standards of a trust bank and allowing it to operate as a regulated financial-services institution. The trust charter is from a state institution, but in practice gives Gemini the ability to take deposits from any customers and operate in all 50 U.S. states. DFS:
We are continuing to move forward on licensing and chartering virtual currency firms. Smart, targeted regulation that helps protect consumers and prevent illicit activity is vital to the long-term future of this industry.
The brothers open an API, or application programming interface, for their index so that developers can build applications using it. Cameron:
We’ve spent a lot of time trying to build a really cool tool. Obviously the index will be big for us because it will be used to price any future ETF. But we also wanted to build on this for the betterment of the Bitcoin community…It’ll be really interesting to see what people do. And even though ostensibly an API of a pricing product is not super sexy, this matters to the Bitcoin community.
The interior design for Winklevoss Capital Management is revealed. According to the designers, BRDesign, the Company wanted to create an office where they could establish the firm as well as provide an ‘incubator’ space where the startups in their portfolio could grow before having to invest in their own office spaces. The 5000 sq ft office has an open and simple space, to foster collaboration within and even between different startups. Tyler and Cameron have the only two private offices in the space, flanking the main conference room, which are glass-enclosed to maintain transparency.
In their debut episode, the twins talk with Branson about the characteristics of a successful entrepreneur. Branson:
I think the most successful entrepreneurs are not the people who sit down and think, ‘how can I make lots of money’ … it’s the people like Larry Page who think, ‘I ought to be able to search for something. There’s no place I can do it.’ And they sit in their garage and they make a search machine.
Cameron announces Winklevoss Radio, an hour-long, limited-run radio show hosted by the brothers on Sirius XM, Indie Channel 104. The show will start Thursday May 22 and focus on early-stage startups, entrepreneurship and venture investing. Guests are set to include Richard Branson, Mike Judge and Justin Matteen (co-founder of Tinder).
Speaking to the Guardian the Winklevoss twins say Bitcoin could be bigger than Facebook:
Bitcoin potentially could be more impactful because being able to donate 50 cents to someone across the world has more impact than potentially sharing a picture,” he explains. “But they’re very different. Facebook is like the internet – a large company and an application. Bitcoin is a protocol for decentralisation, so you could build a decentralised company on top of it, a stock market. It’s an internet of ownership, so it’s not quite a direct comparison.” In the same way Facebook encouraged us to be socially open, bitcoin encourages us to be financially open.
The twins also predict that large financial institutions will get involved in the protocol this year:
If a new technology comes out and the incumbent doesn’t evolve, then they generally lose. When it gets to tipping point it’s usually not a long fight. It’s a category killer.
The brothers disclose in a regulatory filing (docs) that they will list their Bitcoin exchange-traded fund, the Winklevoss Bitcoin Trust, on the Nasdaq stock exchange. The fund would buy one Bitcoin for every five shares. The company the two operate, Math-Based Asset Services, would be in charge of storing the fund’s Bitcoin holdings. The company has not decided how its management fee.
The twins book a flight into space on Richard Branson’s Virgin Galactic using Bitcoin.
Tyler: Why? Because Bitcoin and Sir Richard Branson’s Virgin Galactic are two technologies that meaningfully represent our focus at Winklevoss Capital – the reduction of pain-points and friction in an effort to build a better world.
In an email to The New York Times Cameron, who with Tyler own about $64.1 million worth of the virtual currency, said that the closure of Mt Gox’s closure “underscores just how far the Bitcoin ecosystem has come.”
Cameron: Several exchanges have seamlessly picked up the slack and the market price has shown remarkable resilience. Mt. Gox is in the past, and the brightest minds in the room are hard at work building a responsible and secure future.”
The twins submit a revised filing with the US Securities and Exchange Commission for Winklevoss Bitcoin Trust (filing), the long-awaited bitcoin exchange-traded fund (ETF) the investors first proposed in 2013.
Changes from the original include altered language related to the inclusion of the Winkdex as the indicator of pricing for the ETF and new passages detailing how the ETF would be affected by large-scale attacks to the blockchain, the volatility of new bitcoin exchanges and regulatory actions by foreign nations that may lead to the “restriction of ownership, holding or trading in the Shares”.
The Twins launch Winkdex, a bitcoin price tracker. The index takes an amalgamation of bitcoin prices over six exchanges, including Japan’s MtGox, Britain’s Bitstamp and Bulgaria’s BTC-E. The prices are averaged together using a “proprietary, patent pending Winkdex formula” which takes into account volume and timing of transactions. Cameron is the CEO of the company behind Winkdex, Tyler, is the president of the firm.
Cameron: We believe that we are establishing an accurate spot price that reflects the true value of a bitcoin and resolves the price confusion that exists due to the various exchanges. The creation of an index that better reflects accurate pricing is the next step in wider acceptance of bitcoin as an asset class
In the first of two days of hearings held by New York’s top banking supervisor on the topic, prominent bitcoin entrepreneurs such as Cameron and Tyler Winklevoss acknowledged potential benefits of setting certain rules on the industry but warned that too much regulation could stall innovation and send jobs overseas. Regulation “will play the biggest role in bitcoin’s forthcoming evolution,” Cameron Winklevoss told a panel from the New York Department of Financial Services. He warned that “overregulation could cripple its development.”
Shrem is arrested at JFK airport and charged with money laundering. Shrem, along with a co-conspirator, is accused of selling over $1 million in bitcoins to Silk Road users, who would then use them to buy drugs and other illicit items.According to the criminal complaint, Shrem allegedly also bought drugs on Silk Road. Manhattan U.S. Attorney Preet Bharara:
As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road. Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”
The Winklevoss twins response:
When we invested in BitInstant in the fall of 2012, its management made a commitment to us that they would abide by all applicable laws – including money laundering laws – and we expected nothing less. Although BitInstant is not named in today’s indictment of Charlie Shrem, we are obviously deeply concerned about his arrest. We were passive investors in BitInstant and will do everything we can to help law enforcement officials. We fully support any and all governmental efforts to ensure that money laundering requirements are enforced, and look forward to clearer regulation being implemented on the purchase and sale of bitcoins.
People own their own bodies, and have the absolute right to put anything they want into it. People like the FBI, and DEA agents who want to lock people in cages for buying, selling, or using drugs are the ones committing evil, and they need to stop. I look forward to the day when they see the error of their ways, and stop committing evil acts in the name of ‘law enforcement’.
The money laundering charge carries a maximum sentence of 20 years in prison. BitInstant is now offline.
The twins tell CNBC that they believe bitcoin should be worth at least 100 times more than it’s valued today.
The small bull case scenario is a $400 billion market cap. So the market cap is around $4 billion right now.
Tyler also noted that the closure of The Silk Road, an online marketplace for contraband and drugs had beeen positive for Bitcoin:
Prices are double what it was before Silk Road was shut down. So the demand to use bitcoin for illicit activity was clearly almost zero.
According to a new filing with the SEC, a trust sponsored by Winklevoss Capital Management has registered to offer shares that will give buyers exposure to Bitcoin.
The investment objective of the Trust is for the Shares to reflect the performance of a weighted average price of Bitcoins, less the Trust’s expenses. The Sponsor believes that, for many investors, the Shares will represent a cost-effective and convenient means to access exposure to Bitcoins
BitInstant, a New York City based startup that operates an online platform for buying and selling Bitcoins, raises $1.5 million in a seed funding round led by Winklevoss Capital. BitInstant’s full-time staff of 16 led by CEO Charlie Shrem processes approximately 30 percent of the money going into and out of Bitcoin, and last month alone facilitated 30,000 transactions. The Winklevosses say they were attracted to invest in BitInstant in large part because Shrem is the vice chairman of the Bitcoin Foundation, and CIO Alex Waters previously worked with the core developers on the original Satoshi Bitcoin client.
Cameron: Charlie has been in the space for a very long time, and he has an impeccable reputation among Bitcoiners.
The twins annouce they own nearly $11 million of the virtual currency, one of the single largest portfolios of the digital money. At this time the total market size of Bitcoin is $1.3 billion.
Cameron: People say it’s a Ponzi scheme, it’s a bubble. People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.
The brothers began dabbling in bitcoin in summer 2012 when the dollar value of a single coin was still in the single digits. To keep their holdings secure from hackers, they have taken the complex codes that represent their holdings off networked computers and saved them on small flash drives, putting the drives, in turn, in safe deposit boxes at banks in three different cities.
Tyler: We have elected to put our money and faith in a mathematical framework that is free of politics and human error. It has been four years and it has yet to be discredited as a viable alternative to fiat currency. We could be totally wrong, but we are curious to see this play out a lot more.
WSJ’s Stu Woo asks the Winklevoss twins to teach him Olympic-level rowing:
While partying in Ibiza the twins are introduced to Bitcoin:
Tyler: We were on vacation, and happened to bump into a guy who is mutual friend and he started to tell us about bitcoin. We were fascinated from day one. At the time we were just re-immersing ourselves inside the tech world, getting into the trenches again.
Facebook announces its intitial public oiffering (IPO). It is speculated that the twins 2008 settlemet of 1.2 million shares could be worth $300 million if Facebook is valued at $100 billion. By comparison Mark Zuckerberg;s share could be worth 28 billion due to to his 28% stake in the firm.
The twins buy an $18 million, 8,000 sq ft mansion in the Hollywood Hills. Tyler will live in the 8,000 square foot home as they launch the West Wing of their venture capital company, Winklevoss Capital. Cameron will stay mainly in New York City, where they have signed a five-year lease for their company’s headquarters.
The two-story contemporary design has five bedrooms and eight bathrooms in the prestigious Bird streets with unobstructed Views of the entire Los Angeles Basin.
The twins had been planning to appeal the April 11 ruling but in a filing they said that after “careful consideration,” they decided not to seek Supreme Court review. The filing did not give a reason for the decision. Facebook said:
We’ve considered this case closed for a long time, and we’re pleased to see the other party now agrees.
The U.S. Appeals court tells the twins they must abide by their settlement with Facebook (Judgement PDF). The twins, along with ConnectU co-founder Divya Narendra, accepted their $45 million of stock at a price that valued Facebook at $15 billion but they later learned that Facebook’s board had adopted an internal valuation of just $3.7 billion. Had this lower valuation been used, the Winklevoss twins would have received more Facebook shares in the settlement. However, Judge Alex Kozinski ruled:
Kozinski: The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity.
For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.
The first trailer for the upcoming movie based on Facebook’s early days is released. The movie will star Arnie Hammer as both twins and Jesse Eisenberg as Mark Zuckerberg.
Watched by their parents, the twins row for Oxford in the annual boat race. Oxford loses.
Tyler: I thought we were in quite a good position up until Hammersmith Bridge. But then we just couldn’t keep it going, and Cambridge came at us. I feel pretty disappointed; there’s a terrible gap between winning and losing in this race.
Cameron: It’s not the result we wanted. But it certainly turned out to be a rowing spectacle.
The Winklevosses placed sixth out of the six boats in the final with a time of 7:05.58 on the 2,000-meter course; the gold was snagged by the Australian crew of Drew Ginn and Duncan Free, the team that had beaten the Winklevosses in the event’s semifinal on Wednesday. The Australians won with a time of 6:37.44.
Rounding out the medal stand in second and third place, respectively, were crews from Canada and New Zealand. In fourth was Germany, and South Africa placed fifth.
The lawsuit (docket) filed, by the Winklevoss brothers, and Divya Narendra, accuses Mark Zuckerberg of stealing the source code, design, and business plan for Facebook in 2003 when he briefly worked in the Harvard dorms as a programmer for their own fledgling social-networking site, now known as ConnectU. The plaintiffs have demanded that Facebook be shut down and that full control of the site – and its profits – be turned over to them. In their motion to dismiss, Zuckerberg’s lawyers note:
Only one of [the students] had an idea significant enough to build a great company. That one person was Mark Zuckerberg.
Facebook expects to earn $30 million this year on revenue of $150 million, mostly derived from advertising, according to the Wall Street Journal.
Zuckerberg hacks into ConnectU’s site and makes changes to multiple user profiles, including makeing a fake profile for Cameron Winklevoss. The profile lists Cameron’s height as 7’4″, his hair color as “Ayran Blond,” and his eye color as “Sky Blue.” He listed Cameron’s “language” as “WASP-y.” He also logged into the accounts of some ConnectU users and changes their privacy settings so they are invisible to other users. He also deactivates about 20 ConnectU accounts entirely.
Three months after thefacebook.com launches HarvardConnect, now renamed as ConnectU, launches.
Tyler: It’s sort of a land grab, You feel robbed. . . . The kids down the hall are using it [Facebook], and you’re thinking, ‘That’s supposed to be us.’ We’re not there because one greedy kid cut us out.
The HarvardConnect team send a cease & desist letter to Zuckerberg.
The Winklevosses and Narendra find out about thefacebook.com when they read a press release in The Harvard Crimson, the student newspaper.
Tyler: None of us knew about it until we picked up the [Crimson]. We read this article that says ‘thefacebook launched by Mark Zuckerberg,’ and we sort of stepped back and were like, ‘Well, that sounds like our idea…’
According to Gao, who looked at the HarvardConnection code afterward, Zuckerberg had left the HarvardConnection code incomplete and non-functional, with a registration that did not connect with the back-end connections.
Zuckerberg launches thefacebook.com, a social network for Harvard students, designed to expand to other schools around the country.
In a meeting with the team Zuckerberg tells the HarvardConnection team that he will continue to work on the site and would email the group later in the week. Zuckerberg informs them that he is involved with another project. but does not elaborate. He does not mention that he has registered thefacebook.com nor that he is setting up a rival website.
After the meeting, Zukerberg has another IM exchange with his friend. He tells her, in effect, that he had wimped out. He hadn’t been able to break the news to Cameron and Tyler, in part, he said, because he was “intimidated” by them. He called them “poor bastards.”
Zuckerberg registers the domain name thefacebook.com. The next day he emails Eduardo Saverin, saying that the site thefacebook.com was almost complete and that they should discuss marketing strategies
After several weeks of saying he was busy with other work, Zuckerberg meets with the Winklevosses and Narendra in his dorm room, allegedly confirming his interest and assuring them that the site was almost complete. On the whiteboard in his room, Zuckerberg allegedly had scrawled multiple lines of code under the heading “Harvard Connection,” and this would be the only time they saw any of his work.
In early January Zuckerberg has the following IM exchange with a friend
FRIEND: so have you decided what you are going to do about the websites?
ZUCK: yea i’m going to f-ck them
ZUCK: probably in the year
In emails Zuckerberg says he is too busy to work on the site
Sorry it’s taken a while for me to get back to you. I’m completely swamped with work this week. I have three programming projects and a final paper due by Monday, as well as a couple of problem sets due Friday. I’ll be available to discuss the site again starting Tuesday…I”m still a little skeptical that we have enough functionality in the site to really draw the attention and gain the critical mass necessary to get a site like this to run…Anyhow, we’ll talk about it once I get everything else done.
An IM exchange with Zuckerberg’s friend shows he is conflicted about developing HarvardConnections (“that dating site) and thefacebook.
Z: So you know how I’m making that dating site
Z: I wonder how similar that is to the Facebook thing
Z: Because they’re probably going to be released around the same time
Z: Unless I f-ck the dating site people over and quit on them right before I told them I’d have it done.
Z: Like I don’t think people would sign up for the facebook thing if they knew it was for dating
Z: and I think people are skeptical about joining dating things too.
Z: But the guy doing the dating thing is going to promote it pretty well.
Z: I wonder what the ideal solution is.
Z: I think the Facebook thing by itself would draw many people, unless it were released at the same time as the dating thing.
Z: In which case both things would cancel each other out and nothing would win. Any ideas? Like is there a good way to consolidate the two.
D: We could make it into a whole network like a friendster. haha. Stanford has something like that internally
Z: Well I was thinking of doing that for the facebook. The only thing that’s different about theirs is that you like request dates with people or connections with the facebook you don’t do that via the system.
Z: I also hate the fact that I’m doing it for other people haha. Like I hate working under other people. I feel like the right thing to do is finish the facebook and wait until the last day before I’m supposed to have their thing ready and then be like “look yours isn’t as good as this so if you want to join mine you can…otherwise I can help you with yours later.” Or do you think that’s too dick?
D: I think you should just ditch them
Z: The thing is they have a programmer who could finish their thing and they have money to pour into advertising and stuff. Oh wait I have money too. My friend who wants to sponsor this is head of the investment society. [He is talking about Eduardo Saverin] Apparently insider trading isn’t illegal in Brazil so he’s rich lol.
Zuckerberg sends an IM to his friend Severin:
Check this site out: www.harvardconnection.com and then go to harvardconnection.com/datehome.php. Someone is already trying to make a dating site. But they made a mistake haha. They asked me to make it for them. So I’m like delaying it so it won’t be ready until after the facebook thing comes out.
Zuckerberg tells Cameron that he doesn’t expect completion of the project to be difficult. Over the next few days he sends a series of emails indicating he is working on the site.
I read over all the stuff you sent and it seems like it shouldn’t take too long to implement, so we can talk about that after I get all the basic functionality up tomorrow night.
And on Dec 1:
I put together one of the two registration pages so I have everything working on my system now. I’ll keep you posted as I patch stuff up and it starts to become completely functional.
The brothers and Narendra meet Zuckerberg in the dining hall of Harvard’s Kirkland House, where they explain the HarvardConnection website, the plan to expand to other schools after launch, the confidential nature of the project, and the importance of getting there first. During the meeting, Zuckerberg allegedly enters into an oral contract with Narendra and the Winklevosses to become a partner in HarvardConnection.
Although his attorneys have denied that any formal discussion about compensation or ownership of Harvard Connection took place, Gao would later tell the court:
I told him that [Narendra and the Winklevosses] would either pay him on a rolling basis or take him on as a partner with the possibility of taking an equal stake. He became visibly excited. He told me that he wanted the latter option … because he thought the Harvard Connection website had the potential to reach out to a very large user base.
He is given the private server location and password for the unfinished HarvardConnection website and code, with the understanding that he will finish the programming necessary for launch. Zuckerberg allegedly chooses to be compensated in the form of sweat equity.
When did Zuckerberg actually start work? See comments for discussion.
The site has front-end pages, a registration system, a database, back-end coding, and a way users can connect with each other, which Gao called a “handshake”. Because Gao is leaving, the Winklevosses and Narendra contact Mark Zuckerberg about joining the team. Narendra emails Zuckerberg:
We’re very deep into developing a site which we would like you to be a part of and … which we know will make some waves on campus
Zuckerberg is well-known at Harvard for creating Facemash, a “Hot Or Not” clone for Harvard. Zuckerberg had got in trouble because he had pulled photos from Harvard’s webservers. Even so, the site had been an instant hit.
The brothers, along with their friend, Divya Narendra start work on a social network for Harvard students named HarvardConnection, which was to expand to other schools around the country. They hire Sanjay Mavinkurve, who works on the system until Spring 2003 and then Victor Gao, who is paid $400 for his work on the website code during the second half of 2003.
Amanda Wiklevoss, 23, dies on the set of the movie “Analyze That”. Amanda asked her friends to wait in a car while, in heavy rain, she approached a camera truck on the “Analyze That” set in the hope of introducing herself to filmmakers working on the Robert De Niro-Billy Crystal film. She was an aspiring film maker and had just sold a documentary caled “Mistaken Identity“, related to the Sept. 11 World Trade Center attacks. However, after she was ordered out of the truck she fell from the wet ramp banged her head and slumped unconscious on the ground. A teamster from the set drove to St. Vincents Hospital on Seventh Avenue, where she was pronounced dead on arrival. Although friends believe she may have been electrocuted, the twins confim police reports that Amanda died of a cocaine overdose and cardiac arrest. A memorial service is held in Greenwich and she is buried in Quogue, the Wiklevoss’s summer hometown.
The twins are born in Southampton, New York. Their parents have never told them who is older.
Their grandfather had an eighth-grade education, their great-grandfather thought Xerox machines were portents of evil, and in old age was fully hunched over after years of working in the Pennsylvania coal mines, alongside his own father, who died of black lung. Their mother’s (Carol) family were vaudevillians who lived canvas-covered flatbeds.
Their father, Howard Winklevoss Jr., went to Grove City College, where he studies accounting. He became a and professor at the Wharton School of Business. He becomes wealthy through Winklevoss Technologies, at $20 million annual revenue company that licenses actuarial software to Fortune 500 companies.
The are raised in Palo Alto until age 4, then go to Greenwich Country Day School before attending the Brunswick School for high school. They enjoy the classics in high school, studying Latin and Ancient Greek.
After seeing how much their neighbor enjoyed the sport, Winklevoss and his brother began rowing during the freshman year of high school. Training at a local club in Westport, they eventually start the crew team at their high school. Cameron credits his father’s love of endurance sports and his high school coach for his positive motivation.