CEO of BitInstant Charlie Shrem Arrested – SilkRoad Money Laundering

The CEO for the Bitcoin exchange site BitInstant, Charlie Shrem, has been arrested along with Robert Faiella on charges of having conspired to launder money as well as operating an unlicensed money operation.

The charges go back to the infamous SilkRoad, where users bought and sold drugs on the underweb and paid using Bitcoins. Doing so allowed users to be anonymous and not fear that any money transactions could be tracked back to them in any way.

The United States Justice Department published a statement on their website in regards to the case, confirming that both Shrem and Faiella had been arrested around the same time and had their charges presented to them.

Preet Bharara who is the US Attorney in the case made the following comment: “As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road, 

and continued:

“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.”

Prosecutors believe that Faiella and Shrem sold Bitcoins to the users of SilkRoad and that they exchanged more than $1 million in cash for Bitcoins for users. Furthermore they claim that Shrem himself used SilkRoad to purchase illegal drugs. The feds made the following statement in regards to what Shrem and Faiella did:

“Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way. 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.”

Shrem was arrested at the John F Kennedy Airport near New York and Faiella was picked up by the feds at his home in Florida. Should they both be found guilty in the charges, they can serve up to 25 to 30 years in prison.

Daniel Allermand

Daniel Allermand is a freelance writer, with more than 4 years of experience in the industry as an operator, affiliate and poker player. Daniel has decided it was time to try and bring more coverage about the industry to the general public by writing articles about everything from poker to casino.  

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