Director Bitinstant arrested for ‘laundering drug money’

Charlie Shrem, director of bitcoin exchange Bitinstant, has been arrested on charges of laundering drug money along with a user of ‘drug market’ Silk Road. The two are said to have sold more than $1 million worth of bitcoins to Silk Road users.

Shrem, 24, who has been charged in New York, is alleged to have supplied bitcoins to Robert Faiella, a 52-year-old man who is said to be active on Silk Road under the nickname BTCKing. An amount is mentioned of approximately 1 million dollars, converted approximately 730,000 euros.

Faiella is said to have sold the bitcoins anonymously to other Silk Road users. According to prosecutors, Shrem was aware that the bitcoins he sold were intended for illegal transactions on the infamous Tor trading site. Shrem, who is also active as a director in the Bitcoin Foundation, is also said to have bought drugs on Silk Road.

Shrem and Faiella have both been charged with conspiracy to launder drug money, Time reports. For that, the two can each get up to 20 years in prison. Shrem is also accused of using an illegal method of money transfers, a crime punishable by up to five years in prison. Furthermore, the Bitinstant director allegedly failed to report criminal activities to the authorities.