Alleged Silk Road Associates Facing The Full Might Of The Law

It seems that the Silk Road saga will be etched in Bitcoin history, and now there are more names and faces to add to the books. Unfortunately not all of these parties had anything to do with the highly popular blackmarket website, not directly at least or not knowingly as they claim. But authorities seem hell bent on tracing and prosecuting even the service providers.

It seems to be a matter of guilty by association but US authorities believe that there is more it. By turning a blind eye to the nefarious activities of Silk Road, these legitimate businesses essentially reneged on their duty to alert the authorities about criminal activity. They may have to some degree assisted in these activities, be it knowingly or not remains to be seen.

Charlie Shrem And Silk Road

The name Charlie Shrem has probably been on the lips of most Bitcoiners over the past two days. He is the CEO of the New York based Bitcoin exchange known as BitInstant and the vice chairman of the Bitcoin Foundation. Shrem is widely respected in the Bitcoin community and managed to acquire a $1.5 million from Winklevoss Capital. But the tide seems to be turning for Shrem.

He was arrested at New York’s John F. Kennedy International Airport and faces money laundering charges. Despite being out on bail, he is confined to his parent’s home. The US Attorney’s Office opposed bail saying that Shrem had the motivation and resources to flee the country. However, Shrem’s lawyer Keith Miller insists that the allegations are “simply allegations” and Shrem is innocent.

According to investigators, Shrem has been charged along with Robert M. Faiella (aka the BTCKing) for conspiring to commit money laundering and operating an unlicensed money transmitting business. Faiella is alleged to have operated an underground Bitcoin exchange on the Silk Road website, where users could acquire Bitcoin anonymously. Shrem is alleged to have been complicit in reporting Faiella’s activities. There are other individual charges against both men.

It seems that Shrem was not just indirectly involved in Silk Road’s activities but authorities claim to have evidence that Shrem himself purchased drugs through Silk Road. They also claim to have evidence of correspondence between Shrem and Faiella which verifies that Shrem has pre-existing knowledge of Faiella’s underground Bitcoin exchange.

Shrem Resigns From Foundation

Today Shrem resigned from the board of directors of the Bitcoin Foundation. It was upon mutual agreement with the board that Shrem opted to resign. Hearings are ongoing and as yet it is unclear whether authorities will be able to make the charges stick. Nevertheless the Foundation felt that the allegations against Shrem may detract from its core policy of promoting Bitcoin use.

The charges against Shrem and Faiella are very serious and could carry a 20 to 30 year jail sentence if the accused are found guilty. There is already suspicion from certain quarters of the Bitcoin community who feel that this is more of a witch hunt in the anti-Bitcoin era. Legitimate Bitcoiners and Bitcoin businesses were quick to respond that Bitcoin is similar to currencies and should not be tarnished based on the illegal activities of some users.

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