Charlie Shrem, 24, who is one of the digital currency’s highest-profile faces, was arrested by US authorities at John F Kennedy airport in New York on Sunday as part of the ongoing investigation into Silk Road, a now-closed online store that allegedly dealt in drugs, guns and other contraband items.
The arrest came as a major blow to the Bitcoin Foundation, which has been lobbying for greater acceptance in Washington for the digital currency and testified before the Senate last year in an attempt to dispel the perception that the currency is linked to organised crime.
Shrem is also the chief executive officer of BitInstant, a Bitcoin exchange company that attracted investment from Cameron and Tyler Winklevoss, famous for their early involvement with Facebook and now two of Bitcoin’s biggest backers. BitInstant aims to widen Bitcoin ownership and allows people to buy the digital currency in over 700,000 locations.
Jon Matonis, the executive director of the Bitcoin Foundation, which is a non-profit organisation, said: “As a foundation, we need to remain focused on our core mission to standardize, protect, and promote the Bitcoin core protocol. While Charlie has contributed a great deal of personal effort and resources to enhance the adoption of Bitcoin worldwide, a prolonged legal dispute would inevitably detract from advancing that core mission.
"Therefore, in order to focus on his pending trial, it has been mutually decided that Charlie Shrem resign from the board of directors, effective immediately."
On Monday, Preet Bharara, the US attorney for the southern district of New York, alleged that Shrem helped Robert Faiella, who was charged alongside him, to sell more than $1m-worth of bitcoins to Silk Road customers. Faiella, a 52-year-old Florida man whom Shrem had never met, allegedly ran an underground Bitcoin exchange using the alias BTCKing.
In a blogpost, the Bitcoin Foundation pointed out that Bharara had said: “The charges contained in the complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty."
It continued: “We are both surprised and saddened to learn of these allegations. The foundation does not condone illegal activities and values transparency, accountability and a high level of responsibility towards its members and overall community.
“It is also worth noting that the indictment itself is not against Bitcoin or the community at large. Indeed, the complaint acknowledges, ‘Bitcoin are not inherently illegal and have known legitimate uses’.”
“As a foundation, we will continue to work towards standardizing the technological infrastructure for widespread adoption, protect the integrity of the Bitcoin protocol, and promoting its social and economic benefits through public education.”
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