BitInstant CEO Charged with Money Laundering in Silk Road Scheme (Jan. 28, 2014)
Federal prosecutors have charged the head of digital currency exchange BitInstant with conspiring to commit money laundering and operating an unlicensed money transmitting business. BitInstant CEO Charlie Shrem has been charged along with Robert Faiella, a Florida man who is alleged to have run an underground Bitcoin exchange on the now-shuttered Silk Road Website. According to prosecutors, Faiella bought more than $1 million worth of bitcoins on BitInstant and then sold it at a markup on Silk Road—where Bitcoin was the only currency accepted—to users who were attempting to buy narcotics through the site.
The complaint alleges that Shrem knew what Faiella was doing and “knowingly facilitated Faiella’s businesses,” personally processing Faiella’s orders for bitcoins and giving him discounts on high-volume transactions. Shrem also is charged with failing to file a suspicious activity report with the Treasury Department about Faiella’s activity. Shrem, 24, is the vice chairman of the Bitcoin Foundation, an organization established in last August with the goal of lobbying for pro-Bitcoin regulation.
In brighter news for digital currency, Ven, a digital currency created in 2007 by social network Hub Culture, has been approved for listing on the LMAX global currency trading platform. “Digital currencies, such as Bitcoin, have been the focus of a lot of attention over the last year,” noted LMAX CEO David Mercer. “The challenge going forward is for them to become transferrable. In order to become credible, virtual currencies have to be able to be used as a purchasing tool.” Mercer added that LMAX plans to list more virtual currencies in the future.
