Bitcoin entrepreneur sentenced to two years in prison

Bitcoins

The bitcoin entrepreneur Charlie Shrem has been sentenced to two years in jail for his part in a money laundering scheme, after a bitcoin exchange he ran was found to be aiding users of the Silk Road black market.

Shrem was previously a senior figure in the bitcoin community, sitting on the board of the foundation which oversees the cryptocurrency, while also running his own exchange, BitInstant. He resigned as a board member after his arrest in January.

“I’ve been sentenced to two years, to self-surrender in 90 days,” Shrem tweeted. “Considering I was facing 30 years, justice has been served.”

In September, he pled guilty to the charges of money laundering, and asked forgiveness from the trial judge. “I screwed up,” he said. “The bitcoin community, they’re scared and there is no money laundering going on any more. They’re terrified. Bitcoin is my baby, it’s my whole world and my whole life, it’s what I was put on this Earth to do. I need to be out there. If your honor grants me that, I can be out there in the world, making sure that people don’t do the same stupid things that I did.

Shrem was accused of running a scheme with Floridian Robert Faiella to sell bitcoins anonymously to users of the Silk Road website.

According to prosecution documents, Faiella ran a business on the Silk Road website under the name BTCKing, where he let users exchange cash for bitcoin anonymously in exchange for a cut. Faiella fulfilled those orders using BitInstant, where Shrem was chief executive and chief compliance officer.

Under US federal rules, BitInstant was a money transmitter, and required to report substantial transactions, or patterns of transactions, which indicated suspicious activity. Shrem never filed any such reports, and the prosecution claimed that he knowingly partnered with Faiella to ensure that the latter would continue to have access to the exchange.

“There’s no question that Mr Shrem, over a period of many months, was knowingly, wilfully, to some extent excitedly and even passionately involved in activities he knew were, in part, involved in serious violations of the law,” the judge said, according to Bloomberg.

In January, the man accused of running the Silk Road website, Ross Ulbricht, is due to stand trial. According to prosecutors, Ulbricht operated the site under the pseudonym “Dread Pirate Roberts”. He is accused of facilitating the trade of illegal drugs, as well as allegedly ordering the assassination of a business associate.

Powered by Guardian.co.ukThis article was written by Alex Hern, for theguardian.com on Monday 22nd December 2014 13.52 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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