Tags: bitcoin | silk road | exec | charged

Bitcoin Exec Linked to Silk Road, Charged With Money Laundering

By    |   Tuesday, 28 January 2014 04:00 PM

The head of a New York bitcoin exchange was arrested Monday on money laundering charges connected to the black market site Silk Road.

Charlie Shrem, CEO of BitInstant, has been accused of helping Robert Faiella, of Cape Coral, Fla., sell bitcoins valued at more than $1 million to people who wanted to sell illegal substances on Silk Road, CNN said. Faiella, 52, was also arrested Monday and charged with conspiracy to launder money and running an unlicensed money transmitting business.

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Shrem’s business, BitInstant, is an exchange that lets people buy electronic currency bitcoins throughout the United States and in several foreign countries, including Brazil and Russia. As chairman of the Bitcoin Foundation, he has been a spokesperson and advocate for the currency.

“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," U.S. Attorney Preet Bharara said in a news release, according to The Associated Press.

U.S. Magistrate Judge Henry Pitman allowed Shrem to be released on bail, almost $1 million in collateral, provided he lives with his parents and is electronically monitored, the AP said. The decision was made over prosecutorial objections.

Assistant U.S. Attorney Serrin Turner pointed to a video Shrem put online where he said he would be prepared to flee the country if there was any government interference in Bitcoin businesses. “I have a plane ticket ready to take me to Singapore. There’s another corporation already set up,” Shrem’s video said, the AP reported.

Shrem’s attorney said other videos show his client expressing his desire to run his business according to all laws, and said he should be “presumed innocent,” the AP said.

Shrem bought drugs on Silk Road and knew what that website was doing, federal prosecutors allege.

Silk Road had more than 1 million registered users, AP said, and saw more than $1 billion worth of transactions from January 2011 until it was shut down in September 2013.

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The head of a New York bitcoin exchange was arrested Monday on money laundering charges connected to the black market site Silk Road.
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Tuesday, 28 January 2014 04:00 PM
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