CEO of BitIntstant arrested, charged with conspiring to launder money on Silk Road

The office of the US Attorney for the Southern District of New York, James J. Hunt, announced today that BitInstant CEO Charlie Shrem was one of two people arrested for and charged.

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CEO of BitIntstant arrested, charged with conspiring to launder money on Silk Road

The office of the US Attorney for the Southern District of New York, James J. Hunt, announced today that BitInstant CEO Charlie Shrem was one of two people arrested for and charged with a scheme “to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road.”

The US Attorney’s press release states that Robert Faiella (“BTCKing) and Charlie Shrem were charged with “conspiring to commit money laundering, and operating an unlicensed money transmitting business.”

Each count of conspiring to commit money laundering carries a maximum sentence of 20 years in prison. Each count of operating an unlicensed money transmitting business carries a maximum sentence of five years.

The press release alleges that Faiella operated an exchange for Silk Road users who used Bitcoins to buy drugs, and that Shrem helped facilitate the Bitcoin exchanges.

According to the statement, Shrem:

 

  • allowed Faiella to use his company to buy Bitcoins for Silk Road customers
  • personally processed orders from Faiella,
  • gave Faiella discounts,
  • failed to report Faiella’s illegal activity,
  • helped Faiella navigate around AML restrictions that he was supposed to abide by.

Shrem is also vice chairman of the Bitcoin Foundation in addition to his role at BitIntstant, which is backed by the Winklevoss twins.

BitInstant has been offline since summer 2013.

Shrem was a last-minute scratch from the lineup at the North American Bitcoin Conference in Miami this past weekend. No official explanation was given for his absence.

Shrem’s arrest took place at JFK airport in New York. Faiella was arrested at his home in Cape Coral, Florida.

 

 

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