The Dept. of Justice released Monday morning an arrest of Charlie Shrem, CEO of BitInstant, a Bitcoin exchange at JFK airport this morning and charged with money laundering, posted the Business Insider site today.
Preet Bharara, the United States Attorney for the Southern District of New York, James J. Hunt, the Acting Special-Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), have arrested and charged Charlie Shrem, along with a co-conspirator, 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 himself bought drugs on Silk Road.
‘Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way,’ DEA agent James Hunt said in a release.
Shrem is expected to be presented in Manhattan federal court later today before U.S. Magistrate Judge Henry Pitman on charges for engaging in a scheme to sell over $1 million in Bitcoins to users of ‘Silk Road,’ the underground website that enabled its users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement. Each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business.
Shrem is also charged with willfully failing to file any suspicious activity report regarding co-conspirator, Robert M Faiella’s illegal transactions through the Company, in violation of the Bank Secrecy.
Faiella was arrested today at his residence in Cape Coral, Florida, and is expected to be presented in federal court in the Middle District of Florida.
IRS Special-Agent-in-Charge Toni Weirauch said in the statement from the Sept. of Justice: ‘The government has been successful in swiftly identifying those responsible for the design and operation of the ‘Silk Road’ website, as well as those who helped ‘Silk Road’ customers conduct their illegal transactions by facilitating the conversion of their dollars into Bitcoins. This is yet another example of the New York Organized Crime Drug Enforcement Strike Force’s proficiency in applying financial investigative resources to the fight against illegal drugs.’
The arrests come the day before the N.Y. state hearing about the future of Bitcoin. BitInstant, which is backed by the Winklevoss twins, is currently offline. It was recently the subject of a class-action suit alleging misrepresentation of its services.
Shrem and Faiella are accused of working together to exchange over $1 million in cash for Bitcoins for the benefit of Silk Road users, so that the users could, in turn make illegal purchases on Silk Road.
Shrem is a vice chairman at the Bitcoin Foundation. He is listed as a speaker at a Bitcoin conference in Miami that ended Sunday.
To find out more about Bitcoin, please click on the articles listed below in Author's suggestions and view the video atop regarding BitPay as a service exchange.