Bitcoin Entrepreneur Begins His 2-Year Sentence

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Silk RoadBitinstant CEO and founding board member of the Bitcoin Foundation, Charlie Shrem began his stint in prison on March 30th 2015 having been sentenced on 19th December 2014 to 2 years in prison. Shrem had pleaded guilty to a reduced charge of aiding and abetting the operation of an unlicensed money transmitting business.


Charlie Shrem, 25 will serve his time at USP Lewisburg in Pennsylvania. It’s a high security federal prison, but Shrem will be in the minimum security satellite camp.

Shrem was arrested at JFK Airport on January 26 2014, while returning to the United States, after attending a convention in Amsterdam. Shrem along with Robert M. Faiella were accused of selling more than $1 million in bitcoins in a money laundering scheme that involved users of Silkroad – the notorious online black market that was ultimately shut down. Shrem was also accused of wilfully failing to file suspicious activity and operating an unlicensed money transmitting business.

Charlie Shrem used his Bitcoin exchange, Bitstant, to transfer money deposited in bank accounts by clients of the Silkroad.

Shrem’s co-defendant, Robert Faiella, was sentenced to four years in prison in January 2015 after he pleaded guilty to operating an illegal money transmission business. Faiella had been operating a bitcoin exchange on the Silkroad website.

BitcoinsAccording to court documents, between December 2011 and October 2013 when Silkroad was seized by federal agents, Faiella, operating under the user name BTCking on the Silkroad website, allegedly obtained Bitcoins through BitInstant, and then sold them at a profit to drug sellers and buyers on the Silkroad website. Bitcoin was the only form of currency that was used on the Silkroad website to buy drugs and other paraphernalia that were marketed through Silkroad.

Shrem hopes that he’ll only have to serve 9 or 10 months of his 2-year prison sentence. During his stay at the Lewisburg Federal Prison Camp, he’ll share a cell with 2 or 3 inmates. Shrem will be able to stay in contact with the outside world through e-mail, and has requested that people send him messages during his prison time. Additionally, Charlie asked for people to send him magazines and books, letters and articles. He is also encouraging the bitcoin community to send him money that he plans to use to pay for food, e-mail and stamps, phone access and other items.