CEO of Bitcoin Exchange Arrested
Charlie Shrem charged with money laundering in connection with Silk Road
By Kate Seamons, Newser Staff
Posted Jan 27, 2014 12:29 PM CST
This April 3, 2013 file photo shows bitcoin tokens in Sandy, Utah.   (AP Photo/Rick Bowmer, File)

(Newser) – A high-profile arrest in the world of Bitcoin: BitInstant CEO Charlie Shrem, 24, has been arrested and charged with money laundering; the same goes for alleged co-conspirator and "underground Bitcoin exchanger" Robert Faiella (aka BTCKing). Authorities say the two schemed to sell more than $1 million of Bitcoin to users of online drug marketplace Silk Road. Per the criminal complaint, from December 2011 to October 2013, Faiella, 54, sold Bitcoins on the Silk Road website to its users, and then took those orders and filled them using BitInstant.

For his part, the complaint says Shrem "personally processed Faiella's orders; gave Faiella discounts on his high-volume transactions ... and deliberately helped Faiella circumvent the Company's anti-money laundering restrictions ... in order to maintain Faiella's business as a lucrative source of Company revenue." Shrem, described by the Verge as "a well-known voice in the virtual currency community," also himself bought drugs on Silk Road, the complaint alleges. The BBC notes that BitInstant is one of the largest online Bitcoin exchanges, and currently appears to be offline. (Click to read a fascinating profile of the supposed mastermind of Silk Road.)

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Showing 3 of 47 comments
Jerman
Jan 28, 2014 11:35 AM CST
Idiots think the U.S. and NSA can't track Bitcoins.
TwoSheds
Jan 27, 2014 10:16 PM CST
They should realize that the Vatican Bank has dibs on money laundering.
K.KRANK
Jan 27, 2014 8:41 PM CST
I hate to agree with China but I think they got it right on Bitcoin. Just a matter or time before that ponzi banking scheme is outlawed world-wide.