Bitcoin CEO Pleads Guilty To Allegations Related to Silk Road Drug Deals

>> Click here to find the Silkroad URL and know how to get to the Silk Road 2.0 <<

BitcoinCharlie Shrem, the CEO of a Bitcoin exchange company and a leading supporter of the virtual currency, pleaded guilty at a hearing in New York federal court to one account of aiding and abetting the operation of a money-transmitting business that wasn’t registered with the United States Treasury Department. His co-defendant Robert Faiella of Cape Coral, Florida, separately pleaded guilty to operating an unlicensed money transfer business.

Shrem said in court that he knew most of the business on Silkroad involved the purchasing and selling of illicit drugs and that he also knew that what he was doing was wrong.

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Charlie Shrem and Robert Faiella had initially been charged in January with scheming to sell and launder $1 million in Bitcoins. They pleaded guilty to the federal charges as part of a deal struck with the prosecutors from the office of Manhattan United States Attorney Preet Bharara.

United States authorities shut down Silkroad on 2nd October 2013. However a new version of Silk Road was later launched. Shrem and Faiella were both arrested in January. Prosecutors said that they both sold over $1 million in Bitcoins to users of the Silkroad. The Silkroad operated on TOR, also known as The Onion Router, an internet site that routed the users of Silkroad through several computers to conceal their identities and locations. Sellers and buyers and on Silkroad did business in Bitcoin, a virtual currency that gave them another layer of anonymity.

vice chairman of the Bitcoin Arrested

Shrem is well known in the bitcoin community. He resigned from his position as the vice chairman of the Bitcoin Foundation, soon after he was arrested. He was previously the CEO of BitInstant, a Bitcoin exchange company. He was also BitInstant’s compliance officer, responsible for making sure that the company followed the law. Faiella had operated Bitcoin exchange on Silkroad from December 2011 until the website was shut down.

According to court documents, Shrem had processed transactions for Robert Faiella through BitInstant, in spite of knowing that the Bitcoins would in the end find their way to Silk Road, where they would be used by customers buy and sell illicit drugs on the Silkroad. The prosecutors stated that Shrem had even given Faiella a discount on high volume trades of Bitcoins that he purchased for Silkroad buyers.

As part of their plea deals, Shrem and Faiella agreed to forfeit $950,000 to the government. By taking a plea deal, Shrem has avoided going to trial on more serious federal charges of violations of the Bank Secrecy Act and money laundering, which carry more prison time. Sentencing was set for 20th January and they both face up to 5 years in prison.

>> Click here to find the Silkroad URL and know how to get to the Silk Road 2.0 <<

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