Bitcoin Exec Commits Money Laundering for Black Market

Vice Chairman Charlie Shrem of Bitcoin Foundation was charged for laundering money for the black market.

According to the complaint filed in the U.S. District Court in Manhattan, the 24-year old Shrem connived with a Florida man named Robert Faiella in selling more than a million dollar worth of bitcoins to users of the illegal online drug bazaar Silk Road.

It said that despite knowing that Faiella's business was channeling money into Silk Road, Shrem permitted the transaction by failing to report suspicious activity to regulators. On top of that, he also used Silk Road to buy himself drugs, like the marijuana-infused brownies.

One of the evidences presented against Shrem is the thread of email messages the two accused have sent to each other.

In one of the private messages Shrem sent to Faiella, whose username was "BTCKing," he said, "Your email address is banned. Buy you can use a different one."

"When Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act," stated U.S. attorney for Manhattan Preet Bharara in a statement emailed to Reuters on Monday. "We will aggressively pursue those who would co-opt new forms of currency for illicit purposes."

Aside for the money laundering case, Shrem was also charged for operating an unlicensed money transmitting business.

On Sunday, Shrem was arrested in John F. Kennedy International Airport in New York but was release on $1 million bond and on a condition that he will stay at his parents' house in the Marine Park section of Brooklyn.

The 54-year old Faiella, on the other hand, was arrested in his home in Coral Gables, Fla. and consented to remain imprisoned until a bail hearing on Wednesday.

Shrem could not be reached as of press time.

"At this point the allegations in the complaint are simply allegations, and Mr. Shrem is presumed innocent," said Shram's lawyer Keith Miller to Reuters.