Nation & World News

CEO Of A Bitcoin Exchange Charged With Money Laundering

By Mark Memmott on January 27th, 2014

Charlie Shrem, CEO of the BitInstant bitcoin exchange, and another man have been charged with allegedly laundering money for individuals who illegally bought drugs online.

Pretty Bharara, U.S. attorney for the Southern District of New York, alleged Monday that Shrem and underground bitcoin exchanger Robert Faiella (“a.k.a. BTCKing”) were part of “a scheme to sell over $1 million in Bitcoins to users of ‘Silk Road,’ the underground website that enabled its users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement.”

According to a Justice Department statement, “each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business.”

Shrem was arrested Sunday at John F. Kennedy International Airport in New York, “and is expected to be presented in Manhattan federal court later today before U.S. Magistrate Judge Henry Pitman,” Justice says. “Faiella was arrested today at his residence in Cape Coral, Fla., and is expected to be presented in federal court in the Middle District of Florida.”

BitInstant, as Business Insider says, is currently offline.

Time magazine writes that:

“The complaint alleges that Faiella took orders from Silk Road users hoping to purchase Bitcoin, the anonymous peer-to-peer crypto-currency. Shrem then filled the orders by transferring funds into an account controlled by Faiella and hosted on a third-party Japan-based Bitcoin exchange. Together the two allegedly sold over $1 million in Bitcoin to Silk Road users, who then used those Bitcoins to attempt to purchase anonymously drugs and other illegal goods from the deep web black market.”

The criminal complaint against the men is here.

NPR’s Jacob Goldstein and David Kestenbaum have previously answered the question “What Is Bitcoin?” on the Planet Money blog. They explained it, in part, this way:

“Bitcoin is a lot like cash — for the online universe. It doesn’t actually exist in the physical world. You can’t hold bitcoins in your hand; they exist only on computers. There is no center to the whole bitcoin system. It’s not like there’s one computer somewhere storing all the information. It’s a peer-to-peer system, run by the people who use it.

“To truly understand bitcoin, you need to use it. We started by visiting an online exchange where you can trade actual dollars for the virtual currency.”

David has also posted on one bitcoin insider’s thoughts about “crime, Congress and Satoshi Nakamoto.”

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

This entry was posted in News from NPR. Bookmark the permalink.

Comments are closed.

 

More Stories in News from NPR

American Pharoah #18, ridden by Victor Espinoza (left), races Firing Line #10, ridden by Gary Stevens, out of turn 4 during the 141st running of the Kentucky Derby at Churchill Downs on Saturday.

American Pharoah Wins 2015 Kentucky Derby

The Bob Baffert-trained horse, ridden by Victor Espinoza, was the favorite heading into the 141st Kentucky Derby at Churchill Downs in Louisville.


Floyd Mayweather Jr., left, and Manny Pacquiao pose during their weigh-in on Friday, in Las Vegas. The world weltherweight title fight between the two will begin tonight at 8 p.m. ET.

Mayweather Outboxes Pacquiao In A Unanimous Decision

The two fighters went 12 rounds but Floyd Mayweather won the welterweight title in Las Vegas Saturday. They each stand to earn millions.


30 Graves, Thought To Be Burmese Migrants, Found In Thailand

Remains from the graves are believed to be illegal migrants who were likely victims of human trafficking.


A Nepali woman cries as she participates in a candle light vigil for victims of last week's earthquake in Kathmandu, Nepal, on Saturday.

Death Toll In Nepal Crosses 6,800

The United Nations has complained that Nepal’s bureaucracy is getting in the way of relief efforts. Government officials in Kathmandu say they aren’t receiving enough of the right kind of aid.


Police officers arrest a man during a May Day march, on Friday, in Seattle.

May Day Protesters, Police Clash In Seattle

Black-clad demonstrators hurled stones and other objects as authorities responded with pepper spray and flash bangs.


Thank you for your support

WUFT depends on the support of our community — people like you — to help us continue to provide quality programming to North Central Florida.
Become a Sustainer
I want to support FM 89.1/NPR
I want to support Florida's 5/PBS
Donate a Vehicle
Underwriting Payments