Bitcoin Dealers Face Money Laundering Charges in US

US authorities have filed criminal charges against two operators of BitInstant, an exchange for the virtual currency Bitcoin, which enabled users to buy drugs and other illicit goods on the Silk Road underground website.

Federal prosecutors said they unsealed a criminal complaint against Robert Faiella and Charlie Shrem, whose company allowed people to use cash to buy Bitcoins. Both are charged with conspiracy to commit money laundering and running an unlicensed money transmitting business, according to a statement from the US Attorney’s office in New York.

Shrem, who was arrested on 26 January at John F Kennedy International Airport in New York, is also charged with violating the Bank Secrecy Act by failing to file any suspicious activity reports. Faiella was arrested the following day at his home in Cape Coral, Florida.

“As alleged, Robert Faiella and Charlie Shrem schemed to sell overUS$1m in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road,” said US attorney, Preet Bharara, in a statement.

“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 co-opt new forms of currency for illicit purposes.”

The latest charges come more than three months after Federal officials seized the Silk Road website used for drugs, hacker tools and other illegal goods and arrested its alleged mastermind, Ross William Ulbricht, who was said to be ‘Dread Pirate Roberts’. Ulbricht, who is awaiting trial in New York, denies the allegations.


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