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Bitcoin Exec Charged With $1 Mil in Money Laundering Out on $1 Mil Bail

Written by:
Aaron Goldstein
Published on:
Jan/28/2014
Bitcoin Exec Charged With $1 Mil in Money Laundering Out on $1 Mil Bail

Charlie Shrem, CEO of one of the largest bitcoin exchanges BitInstant, was released on $1 million bond Tuesday for his alleged role in money laundering tied to the notorious Silk Road website.

The U.S. attorney in the Southern District of New York said Shrem helped someone he hadn't met in person, Robert Faiella, sell more than $1 million worth of bitcoins to Silk Road customers. Faiella, a 52-year-old Florida man, allegedly ran an underground Bitcoin exchange using the alias BTCKing.  Silk Road was one of the first underground websites to engage in bitcoin transactions, mostly for illicit drug deals. 

Faiella was taken into custody at his home in Cape Coral, Fla., on Monday.

Shrem will remain confined to his parents’ home in Brooklyn as part of the release requirement.

BitInstant received a $1.5 million investment last year from Cameron and Tyler Winklevoss. Shrem is also vice chairman of the Bitcoin Foundation, one of the currency's biggest advocates.

For their part, the Winklevoss twins issued a statement Monday distancing themselves from Shrem, saying that the BitInstant management made a clear commitment to abide by all applicable regulations, including money laundering laws.

“We expected nothing less,” the brothers said in a statement, adding that they are deeply concerned by the arrest.

Bitcoin is becoming a widely accepted digital currency for the online gambling sector. 

The average price of bitcoin on all exchanges as of 11 am EDT Tuesday was at 815.82 USD. The recent drop of the bit coin price appears to be related to the arrest of BitInstant CEO Charlie Sheem, though remarkably the digital currency had not taken a harder hit all things considered.

- Aaron Goldstein, Gambling911.com

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