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ExtraTorrent.cc > Articles > Bitcoin Vice Chair Arrested

Bitcoin Vice Chair Arrested

Bitcoin Vice Chair Arrested

Added: Monday, February 3rd, 2014
Category: Recent Headlines Involving File Sharing > Ridiculous Criminal Trials
Tags:ET, p2p, Torrent, Piracy, Peer To Peer, Network, Hackers, Internet, BitTorrent, Google, utorrent, bitcomet, extratorrent, 2013, www.extratorrent.cc
Vice chairman of the Bitcoin Foundation who lobbies on behalf of the digital currency was arrested. He is accused of conspiracy to commit money laundering and encouraging anonymous drug trading.

400_300_Charlie_Shrem_Bitcoin_Arrest_024080981216_.jpg

Charlie Shrem, the Bitcoin’s vice chairman, was arrested at JFK airport. This news came as a shock for the digital currency lobby group and its supporters. Two of them, twins Winklevoss, are known for their early involvement with Facebook, and have recently become backers of the digital currency.

Aside from Shrem, one more individual, Robert Faiella, was also arrested and charged for the same crimes. It is known that he was operating a small Bitcoin exchange under the name BTCKing. The charges accuse both men of engaging in a scheme to sell over $1 million in Bitcoins to Silk Road members. If you remember, Silk Road was the online black marketplace shut down by the FBI last year.

Charlie Shrem was one of the top executives on the Bitcoin Foundation, and the staff of the foundation have been doing their best to distance the digital currency from its links to crime. They testified to the US Senate in 2013 and were lobbying regulators in Washington. They keep insisting that Bitcoin Foundation had never been involved in any of the allegations.

In the meantime, the US drug enforcement administration confirmed that charges depict their commitment to identifying people promoting the sale of illegal drugs. Both arrested men are charged with facilitating anonymous drug sales and earning substantial profits. It is clear that the charges stem from Charlie’s ownership of the BitInstant exchange – he is its CEO and co-founder. The exchange hit the headlines last May when the famous twins led a seed round that raised $1.5 million of investment. As you can understand, the timing of the charges is unfortunate for the Winklevoss, who are set to speak soon at a conference on digital currencies. They explained that when they invested in BitInstant in 2012, its management swore they would abide by all applicable laws. Although the exchange isn’t directly named in the indictment of Charlie Shrem, the twins are deeply concerned about his arrest. The Winklevoss reminded that they are just passive investors in BitInstant and are ready to do everything they can to help law enforcement agencies.

However, the papers revealed that Charlie Shrem is also charged with failing to report any suspicious activity regarding Faiella’s unauthorized transactions via the company. They are accused of developing a scheme to sell over $1 million in Bitcoins to criminals bent on trafficking drugs on Silk Road. Apparently, Bitcoins can be laundered and used to fuel criminal activity like any traditional currency, so law enforcement had to act immediately.

It was found that Robert Faiella offered digital currency for sale on the Silk Road website – this move would entail knowing of their drugs trade. The Bitcoins for sale were bought from the BitInstant exchange, and Shrem, as its compliance officer, was supposed to ensure its compliance of anti-money-laundering laws.

The accusations say that Shrem knowingly allowed Faiella to use BitInstant services to purchase Bitcoins for Silk Road members, and even personally processed all transactions and provided discounts on high-volume order. For some reason, Shrem never filed suspicious activity reports about the transactions, but instead helped Faiella circumvent the anti-money-laundering restrictions.

It should be noted that Winklevoss twins’ investment in the exchange was only a small part of their total investment in digital currency. So they can’t be happy about the news that Shrem and Faiella’s arrest affected the price of Bitcoin, which instantly dropped by 3% on the Mtgox exchange.


By:
SaM
February 3rd,2014

Posted by: 
SaM

Date:  Monday, February 3rd, 2014



Comments (12) (please add your comment »)

1
posted by Site Friend (2014-02-03 15:04:34)
Bigdad47 avatarSurprised? I'm not. You really think the feds will allow the circulation or validation of any currency besides the dollar? Think again.

2
posted by Turtle (2014-02-03 15:55:20)
julio99 avatarMaybe I came into this too late, but what made all these guys using BC think that the Feds would allow someone to open a marketplace for illicit narcotics? Maybe they thought they could get in and out before anyone knew what hit them?

3
posted by (2014-02-03 16:25:27)
edddy avatar1.More People use traditional currency to buy illegal drugs than bitcoin,
2.if bitcoin is not a legal tender for all public and private debt can the charges stand in a court of law?

4
posted by (2014-02-03 16:40:29)
No avatarguess all those people buying drugs etc will have to go back to using the good old greenbacks

5
posted by ET junkie (2014-02-03 16:51:47)
No avatar"Maybe I came into this too late, but what made all these guys using BC think that the Feds would allow someone to open a marketplace for illicit narcotics?"

@julio99

Opening a marketplace for narcotics is one thing. Being accused of money laundering and "encouraging the anonymous drug trading" for selling bitcoins is another. there isn't any legal basis for the charges, not that that is going to stop the good ol' usa. would the winklevoss twins invest in something illegal? no.

6
posted by Trusted UploaderSite FriendET loverTurtle (2014-02-03 16:53:06)
Carjacker avatarThe Zionists will not allow anything other than the Petro-DOllar to be used as top currency - not until they are ready to implement the World Currency they are preparing. You try and set a different standard and BAM!, You're arrested, charged with a boatload of things - while allowing the same things that you do with the Petro-Dollar - so that you will have to either hand over all data, allow US Feds to monitor all data or let Feds control all flow of data - or all 3. Zionists will not allow anything to threaten their paper money pyramid scheme,while depleting and hoarding any and all available sources of 'real' wealth - ie., Gold,Silver,precious metals,precious gems,oil, water sources, land,etc..

7
posted by Turtle (2014-02-03 18:54:41)
No avatarThat's like saying that if you sell baseball cards on Ebay and people are trading said baseball cards on ebay for [insert illegal product here] that you are "laundering money" because the buyers bought something from you.

The only way they should be able to make that stick is if they didn't disclose on their taxes that they sold x number of bitcoins for x amount of federal reserve ponzi-cash IOUs. If it's on their taxes they earned a million from the sale of said bitcoins it is not money laundering.

8
posted by Kitty (2014-02-04 07:34:27)
Crash1 avatarAs an aside to YoMammaSoFat's comment ... Even if he DID disclose the trade on his taxes, it COULD still be classed as money laundering, or facilitating a crime, if you KNOWINGLY sold a non-cash commodity of known price (like BitCoins) to a drug dealer for the current cash equivalent price of that item. Needless to say, PROVING the 'KNOWINGLY' part is the difficult bit.

The problem with Faiella isn't that he TRADED the Bitcoins, but WHERE he traded them ... SILKROAD ... a KNOWN illicit drug marketplace, and that he didn't report the fact that he found out SilkRoad was selling drugs to the authorities (even if they already knew). And he would HAVE to have seen what they were selling to become a registered trader on the site.

Shrem may be acquitted, as HE just sold a commodity to another person, and may not have known what Faiella was going to do with them. (Kind of like if I trade x units of stock in Microsoft to somebody and he uses those stock certificates to pay for some illegal activity, then {by THIS example} I would be at fault for the original sale ... I DON'T THINK SO!)
The ONLY way Shrem could be at fault was if he KNOWINGLY sold the Bitcoins while KNOWING what Faiella was going to do with them. Otherwise, selling Bitcoins to a known bitcoin trader, is not a crime. (Unless the quantities were a LARGE difference to normal trades, THEN he should have reported it [AFTER he made the sale ... no reason to lose money on a deal, and he might just get the coins BACK])

9
posted by Turtle (2014-02-04 14:49:14)
Warwicked avatarThe Banksters are not going to let Bitcoin cut in on their money laundering operations. Executing a few crooked bankers on live T.V. every week would be the most effective method of stopping the proliferation of illicit drugs.

10
posted by Turtle (2014-02-04 20:43:24)
No avatar@Crash1 I think where the case would break down is when any decent defense attorney asks an expert "Was trading legal products forbidden on SilkRoad?". What's that? People could sell whatever they like but usually sold illicit stuff?

11
posted by (2014-02-05 05:02:54)
No avatarAnd American Banks money laundering Billions for the Drug Cartels in Mexico get fines and a slap on the wrist. Completely silly.

12
posted by ET junkieET loverSupermanmen (2014-02-18 17:28:02)
sn3h1t87 avatarwell its money laundering case very serious charge on them .....its quit interesting to follow this story ....



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