HomeBitcoin NewsBitcoin Entrepreneur Pleads Guilty to Enabling Silk Road Drug Deals

Bitcoin Entrepreneur Pleads Guilty to Enabling Silk Road Drug Deals


Bitcoin Entrepreneur Pleads Guilty to Enabling Silk Road Drug Deals

Former CEO of top Bitcoin exchange, Charlie Shrem, and one of his clients, Robert Faiella, pled guilty on charges involving operating unlicensed exchange of money that provided Bitcoins to clients purchasing illegal drugs on Silk Road.

According to Wired, Shrem and Faiella were arrested this year and were charged with exchanging bitcoins worth more than $1 million, which authorities report were used to purchase illicit drugs and substances on Silk Road. At the time, Shrem was the CEO and BitInstant’s compliant officer, with responsibilities to ensure that the company adhered to the law.

Faiella, known as BTCKing from his online handle, pled guilty on Thursday and might receive up to five years of imprisonment. Shrem pled guilty and will receive the same sentence range for aiding and abetting the business of Faiella. Shrem and Faiella will receive their sentence on January 20.

As reported by USA Today, the justice department said, “Working together, Shrem and Faiella exchanged nearly $ 1 million in cash for bitcoins for the benefit of Silk Road users, so that the users could, in turn, make legal purchases on Silk Road.”

Silk Road was shut down by federal agents on October 2 2013. The site, operated on TOR, is a website that provides users the chance of concealing their identities and locations. Sellers and buyers on the site conducted business with Bitcoin, a digital currency giving users anonymity.

Launched in 2009, Bitcoin, is a decentralized digital currency traded from one person to the other rather than via banks. This is generated by computer algorithms and does not have a regulating or issuing country. There are businesses accepting it as a payment option since it is legal in the USA.

According to prosecutors, Faiella, 54, ran bitcoin exchange on the Silk Road from Dec 2011 until the shutdown of the site, and that he violated the federal law by failing to register with Treasury Department as a business transmitting business. Faiella, through Shrem’s company, exchanged his client’s cash for bitcoin.

In a statement, Preet Bharara, Manhattan US attorney said, “Robert Faiella and Charlie Shrem opted to travel down a crooked path, running an illegal money transmitting business that catered to criminals bent on trafficking narcotics on the dark web drug site, Silk Road. The approximately $1 million in Bitcoins Faiella and Shrem sold to these outlaws cost them a lot more than they bargained for and bought them today’s convictions.”

Prosecutors added that Shrem was aware Silk Road was trafficking drugs, and that he knew the bitcoin exchange operated by Faiella for Silk Road clients. In addition, he handled the transactions personally to conceal the operations from partners.

Prior to his January indictment, Shrem was Bitcoin Foundation’s vice president and was renowned in bitcoin community. The Foundation is a trade group promoting bitcoin as an alternative currency. On the website of the Foundation, Shrem’s bio describes him as “using his position in the old banking world and new, alternative currency world to help pave the way for the bitcoin economy to emerge in early 2011.”


Deepak Tiwari
Deepak Tiwarihttps://www.livebitcoinnews.com/
Deepak Tiwari, a law graduate, has been working as a journalist for six years now. He currently writes on Bitcoin, economic, and Forex related news at ForexMinute, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers for readers, traders and brokers. His other specialties include writing on law & governance, finance, internet marketing, careers, politics, international relations & diplomacy, etc.

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