Charlie Shrem, the head of Bitcoin exchange, was arrested on a charge of money laundering, Business Insider said on January 27. The 24-year-old CEO of Biltstant is accused of selling 1 million bitcoins to the users of Silk Road, an online black market. Robert Faiella, a Silk Road user, is also under the investigation.
According to the press release available on the governmental website, since December 2011 to October 2013, Faiella (a.k.a. BTCKing) was selling over bitcoins to Silk Road users, the only method of payment on the Deep Web black market. Shrem filled the orders for bitcoins by transferring money into Faiella’s account. The two alleged attempted to purchase drugs and other illegal goods anonymously.
According to the prosecution, the criminal scheme ensured a steady income. The criminal duo of Shrem and Faiella that split in late 2012 laundered more than $1 million.
BitInstant was not mentioned at the hearing, however, the investigation suggests that this company was involved in the wrongdoing. In late 2013, the probable founder of Silk Road was accused of distributing drugs, preparing assassinations, hacking, and money laundering. Same accusations except for the preparing assassinations were brought against the site’s administrators and moderators.
Charlie Shrem founded BitInstant, the company specializing in bitcoin sales. Besides, Shrem is a chairman of Bitcoin Foundation aimed at standardizing and distributing this crypto currency.
In 2013, there was a collective claim filed against BitInstant. Users were complaining that the company provided them with misinformation, in particular, concerning the exact terms of the currency delivery. To date, the site does not work.
