Bitcoin Black Market Executives Slammed With Federal Charges

 Federal Charges for Bitcoin Black Market's two leading ExecsFederal charges for Bitcoin Black Market’s two head executives have caused the website BitInstant to shut down. These two leading executives have both been charged with money laundering. This is more bad news in the lives of the Winklevoss twins, as they were two of the top backers. The DEA became involved when knowledge arose that the website facilitated and directly took place in drug sales.

Charlie Shrem, the company’s CEO, was taken into custody on Sunday at New York’s Kennedy airport. He had just been on the roster for a speaking engagement at a Bitcoin conference in Miami. Robert Faiella, Shrem’s partner in cyber crime, ran the website Silk Road, a black market website for narcotics, among other illicit and hard to find items. He was taken into custody on Monday while at his home in Florida.

Shrem is said to have been a patron of the Silk Road, where Faiella used the administrative name of BTCKing and accepted no money, only bitcoins. He then conspired to use Shrem’s bitcoin banking business in order to make sales more difficult to track on the Silk Road. It is also said that Shrem, who serves as vice chairman of a foundation promoting the new bitcoin cyber currency, owns a large amount of bitcoins himself. Overall Sales from the Silk Road have turned over more than a billion dollars in illegal business since January of 2011.

Shrem is supposed to appear in court on Monday to address money laundering charges. His attorney declined to comment, and Faiella does not appear to have an attorney yet. Though this is a cyber-related crime, the U.S. Justice Department has made it clear that they are taking it just as seriously as any other money laundering crime, despite the fact that the defendants were sitting behind computers the whole time. What does this mean for the uncertain future of the bitcoin? One thing is for sure, crime anywhere still doesn’t pay off, even if a few clicks seem like an easy and anonymous task.

In addition to laundering money, according to the full release from the Justice Department, Shrem was also hit with charges of purposefully failing to file any kind of suspicious activity report in relation to Faiella’s unlawful sales. This goes against the Bank Secrecy Act and means that both bitcoin banker and marketer have some serious consequences ahead of both of them. They were also reported to have been teaming up in order to sell over one million dollars in bitcoins to drug dealers and traffickers, hence the conspiracy charges.

The DEA said in the same release that the job of drug law enforcement is to prosecute drug trade at all levels of sales and trafficking, even when the people profiting from such acts looked the other way and acted as if they had no idea it was going on. The IRS also responded that it was quick and easy to identify the people in charge of running and funding the Silk Road website and that both parties responsible were fully aware of their roles in the internet black market system.

The website BitInstant has been shut down due to Federal charges for Bitcoin Black Market’s two head executives who were both charged with money laundering.

By Alisha Grace Scott


ABC News

Business Insider


One Response to "Bitcoin Black Market Executives Slammed With Federal Charges"

  1. Kiljoy616   January 28, 2014 at 10:44 am

    Sound like the Feds are doing everything in their power to destroy Bit at every turn, then again that is what governments do after all. Keep the status quo.


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