BitInstant’s founder Charlie Shrem pleads guilty to Silk Road charges

Charlie Shrem, well-known Bitcoin entrepreneur and founder of the exchange, has pleaded guilty this week to helping the dealer “BTCKing” with the illegal sale of $1 million in BTC to Silk Road customers. The case goes back to the controversial bust of the Dark Web illegal marketplace where clients could anonymously purchase and sell drugs and guns.

Shrem, who accepted the deal in New York, could now be sentenced to five years in prison. However, the deal allows the Bitcoiner to avoid a long and nasty trial or even more serious charges of money laundering and violations of the Bank Secrecy Act, USA Today reports.

“BTCKing”, the nickname of the Silk Road dealer Robert Faiella, also pleaded guilty to operating an unlicensed money transmitting business that was sending money to a criminal enterprise. Both men will be sentenced on 20th January 2015.

According to a statement released by the Justice Department, “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 illegal purchases on Silk Road”.

The prosecutors claim that Shrem was aware of Silk Road’s true nature as a drug-trafficking website. They also claim he knew Faiella operated an illegal cryptocurrency exchange service for the dark web-based bazaar, personally handling the transactions to hide the business from his partners at BitInstant.

After the Silk Road bust and the arrest of Charlie Shrem, the entrepreneur resigned from the Bitcoin Foundation’s board of directors.

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