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Bitcoin broker is charged with laundering Silk Road drug money

Allegedly washed over $1m in digital currency
Tue Jan 28 2014, 12:36
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UNITED STATES authorities have charged Bitcoin entrepreneur Charlie Shrem with money laundering.

A statement from the Manhattan US Attorney's office alleged that Shrem, the CEO of Bitcoin Exchange, and others concocted a scheme that rinsed drug cash for users of the shadowy Silk Road trading website. Also named is Robert Faiella, who is described as an underground Bitcoin trader.

US Attorney for the Southern District of New York Preet Bharara said that both men are charged with conspiring to commit money laundering and operating an unlicensed money transmitting business, and added that Shrem is also charged with not filing reports of suspicious activity.

"As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1m in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road," said Bharara.

"Truly innovative business models don't need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes."

Shrem was arrested in New York and Faiella was picked up at his home in Florida. US federal law enforcement is happy to have collared them and pleased to have struck against the sale of illegal drugs.

"The charges announced today depict law enforcement's commitment to identifying those who promote the sale of illegal drugs throughout the world. Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way," added DEA acting special agent in charge James Hunt.

"Drug law enforcement's job is to investigate and identify those who abet the illicit drug trade at all levels of production and distribution including those lining their own pockets by feigning ignorance of any wrong doing and turning a blind eye."

The criminal case is just beginning and Shrem and Faiella are presumed innocent until proven guilty. Both face 20 years in US federal prison, but Shrem could be sentenced to five more years for turning a blind eye to potentially criminal financial transactions.

According to the statement Shrem knew of Faiella's underground money laundering business and even bought illicit drugs through Silk Road himself. µ

 

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