28 Jan 2014

Bitcoin Exchangers Accused of Money Laundering

US authorities charged two people as part of a money laundering investigation involving more than $1 million in Bitcoins, the Attorney for the Southern District of New York announced in a press release.

Underground Bitcoin exchanger Robert M. Faiella and Charlie Shrem, CEO and Compliance Officer of a Bitcoin exchange company, face charges of conspiracy to commit money laundering and “operating an unlicensed money transmitting business.”

“As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road,” the attorney said.

Faiella, operating online as BTCKing, allegedly owned an underground Bitcoin exchange on the Silk Road website, starting December 2011. He received orders for Bitcoins from Silk Road users and filled them through a New York-based company. This company asked customers for payment to exchange cash for Bitcoins anonymously.

Shrem was accused of supporting Faiella’s business until late 2012 when the company shut down. He was charged with willful failure to file a suspicious activity report on Faiella’s illicit business.

Launched in February 2011, Silk Road is a hidden virtual black marketplace accepting Bitcoins as a form of payment.