The Arrest Of Bitcoins Vice Chairman.

BitInstant’s chief executive officer, together with Robert Faiella, has been arrested and has been charged with plotting to commit the felony of money laundering. According to federal prosecutor, Shrem purchased drugs personally on Silk Road while fully aware of the web-site’s drug trafficking activities. According to the department of Justice, the two were charged with selling a million dollars worth of Bitcoins to individuals who attempted to buy as well as sell drugs on a black market website.

Earlier this month, prosecutors announced that they had forfeited $28m worth of bitcoins that had been impounded from Silk Road. Silk Road is a secret marketplace which has the reputation of being used to buy and sell drugs among other things.

Shrem heads BitInstant, which is bankrolled by the Winkloves twins. Last year, the two pumped in more than $1.5 million in this company. Following the arrest of Shrem and Faiella, a spot check revealed that the BitInstant website remained offline on Monday morning.
Shrem also serves as the Bitcoin Foundation’s vice chairman. Only last weekend, he was featured as a key speaker at the Bitcoin conference that was held in Miami.

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According to one news release that came from the justice department, Shrem was seized in New York at the John F. Kennedy International Airport, and later charged with the crime of money laundering.
U.S Drug Enforcement Administration’s James J. Hunt, said the following in the news release:

“The charges announced today depict law enforcement’s commitment to identifying those who promote the sale of illegal drugs throughout the world.”

He further added that the two, while hiding behind their computers, knowingly contributed to, and facilitated, anonymous drug sales as a result of which they earned significant profits.

In October last year, the Federal Bureau of Investigations, FBI, closed Silk Road and captured Bitcoins worth millions of dollars. Silk Road, the famous online black market, helps people to buy and sell unlawful goods such as guns and drugs.
Since being busted, the FBI has been using the records belonging to Silk Road to track down other people who are also involved in the illegal activities. It is that information that probably led the law enforcers to catch Faiella and Shrem.

Charges preferred on the duo

Faiella, 52, a native of Cape Coral, and Shrem, aged 24 and a native of New York, were both charged with one count, and that is conspiring to commit the crime of money laundering. Also, they were charged with another count of operating a money transmitting business that was unlicensed. The maximum jail term carried by these charges is 25 years. Shrem faces an extra 5 years in jail, after failing to report a suspicious activity.

The justice department says that Faiella secretly operated a bitcoin exchange on the online black market, Silk Road. After he received Bitcoin orders, he would go ahead and fill these orders through BitInstant. After that, he would sell them at a profit to Silk Road.
Being the CEO as well as BitInstant’s chief compliance officer, shrem was allegedly aware of the reasons for Faiella’s exchanges. Additionally, the government alleges that Shrem personally bought drugs from Silk Road.

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