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Bitcoin Exchange CEO Arrested For Laundering Drug Money With Bitcoins

| 28 Jan 2014 06:32
Bitcoin

BitInstant CEO Charlie Shrem has been charged with laundering money for customers of online drug bazaar Silk Road.

U.S. government agents have arrested BitInstant CEO Charlie Shrem on charges that he used his prominent Bitcoin exchange to launder money for customers of the online drug bazaar: Silk Road. Shrem's exchange, based in New York City, lets people buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. He is also vice chairman of the Bitcoin Foundation, one of the currency's biggest advocates.

The police state that Shrem helped a man called Robert Faiella sell more than $1 million worth of Bitcoins to Silk Road customers. Faiella allegedly ran an underground Bitcoin exchange using the alias BTCKing.

Both have been arrested and are charged with conspiracy to launder money and operating an unlicensed money transmitting business. Additionally, Shrem faces a charge for not tipping off the feds to what was allegedly going on.

Cameron and Tyler Winklevoss, who invested $1.5 million in BitInstant last year to help it get off the ground, said in a joint statement: "When we invested in BitInstant in the fall of 2012, its management made a commitment to us that they would abide by all applicable laws - including money laundering laws - and we expected nothing less."

The official BitInstant website has been brought down, and it is uncertain how this ruling will affect its customers.

Source: CNN

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