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Digital Life

Bitcoin Operators Charged for Money Laundering

Bitcoin Operators Charged for Money Laundering
January 29, 2014 9:39AM

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Prominent bitcoin world figure Charlie Shrem was arrested and charged in connection with a money-laundering conspiracy that allegedly funneled more than $1 million of the digital currency to users of the online black-market site Silk Road. Another man, Robert Faiella, also was arrested. The men are accused of facilitating anonymous drug sales.

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The top executive of a New York City-based Bitcoin company and a Florida Bitcoin exchanger have been charged with conspiring to commit money laundering by selling more than $1 million in Bitcoins to users of the black market Web site Silk Road, authorities said Monday.

Charlie Shrem, 24, the chief executive officer of BitInstant and vice chairman of a foundation that promotes the Bitcoin currency system, was arrested Sunday at New York's Kennedy Airport, and Robert Faiella was arrested Monday at his Cape Coral, Florida, residence, prosecutors said.

Faiella and Shrem conspired to sell more than $1 million in Bitcoins to criminals who wanted to sell narcotics on Silk Road between December 2011 and October, U.S. Attorney Preet Bharara said in a release.

"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," Bharara said.

Over the objection of prosecutors, U.S. Magistrate Judge Henry B. Pitman allowed Shrem to be released on bail, though he required him to submit to electronicmonitoring and live with his parents in Brooklyn. They were required to post nearly $1 million in property as collateral.

Assistant U.S. Attorney Serrin Turner said Shrem "has held himself out as a `Bitcoin millionaire'" who was ready to flee rather than face charges that could put him in prison for nine to 11 years.

Turner said the nature of the Bitcoin industry meant that Shrem had a "storage locker in the clouds" with money to facilitate flight. He added that Shrem had traveled internationally 16 times since 2007, with most of the trips in the past two years to places including the Netherlands, Turkey, Panama, Aruba and Mexico.

Turner played a video interview of Shrem posted online in which the Manhattan resident boasted that if the government tried to make arrests or take down companies that promote the use of Bitcoin, "I have a plane ticket ready to take me to Singapore. There's another corporation already set up."

Shrem's defense lawyer, Keith Miller, said there were other videos of his client saying that everybody involved with virtual currency should comply with the law. In setting bail conditions, Pitman said he appreciated that "sometimes people make statements on video that may or may not carry weight."

As the bearded Shrem entered court in a sweatshirt with a hood on it, he waved to his family and nodded toward his girlfriend. Miller challenged a report from authorities that claimed Shrem had $6 million in assets, saying it apparently counted money that a company his client supported hoped to raise from investors. (continued...)

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Tell Us What You Think
Comment:

Name:

Jenna:

Posted: 2014-02-01 @ 10:41am PT
Everybody is making money with Bitcoin. It was $4 just last year and rose to over $1200.

There's plenty of media hype surrounding the currency but nobody really tells you the whole story.

Do yourself a favor and find out the Secrets of Bitcoin.

http://bit.do/BitCoinSecrets

jp11101:

Posted: 2014-01-31 @ 10:21am PT
Rickards is correct. When is Mainstream Media going to start covering this obvious case of selective prosecution by the Obama Administration/DOJ? See: http://libertyblitzkrieg.com/2014/01/27/some-money-launderers-are-more-equal-than-others-part-2-ceo-of-bitinstant-is-arrested/

How many Billions of US Dollars did HSBC launder for the Mexican Drug Cartels without a single Gangster Bankster C-suite executive being investigated or indicted by Obama’s Attorney General? See: http://www.bloomberg.com/news/2013-07-02/hsbc-judge-approves-1-9b-drug-money-laundering-accord.html

======
Jim Rickards: ‏now Stalin's NKVD police chief, #Beria, said "show me the man, and I'll find you the crime." Obama case v BitCoin execs is a case in point.

THE FEDS WILL GO AFTER AND SQUASH ANY CURRENCY (DIGITAL OR GOLD/SILVER) THAT COMPLETES WITH THEIR PHONY BALONEY BACKED-BY-NOTHING US DOLLAR SCAM

======



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