Bitcoin Exchange Operators Charged With Money Laundering

Bitcoingeralt / Pixabay

U.S. authorities have filed money laundering charges against two operators of bitcoin-based businesses, according to a statement from the U.S. Attorney’s Office for the Southern District of New York. Officials from the U.S. Attorney’s Office, the Drug Enforcement Administration and the Internal Revenue Service unsealed the charges against Robert M. Faiella and Charlie Shrem today.

Two charged with money laundering

Officials say Faiella ran “underground Bitcoin exchanger” BTCKing, while Shrem is CEO and Compliance Officer of BitInstant, a bitcoin exchange. In addition to running BitInstant, Shrem is also vice president of the Bitcoin Foundation, one of the main trade groups focused on the digital currency. Authorities arrested both of them on Sunday and charged them with conspiracy to commit money laundering and operating an unlicensed money transmitting business. They also charged Shrem with willfully failing to file a report on suspicious activity about Faiella’s “illegal transactions.”

According to officials, Faiella and Shrem engaged in a scheme to sell more than $1 million in bitcoin to users of Silk Road, a marketplace for black market goods. U.S. authorities shut down Silk Road late last year.

How the alleged bitcoin scheme worked

The statement alleges that Faiella was operating an underground bitcoin exchange on Silk Road, selling the digital currency to users of the site—which only accepted bitcoins as payment. Users of the Silk Road site allegedly bought bitcoins from Faiella and used them to purchase illegal drugs. After receiving orders for the digital currency, Faiella then allegedly used a company to fulfill them, enabling customers to buy bitcoins without revealing their identities.

Officials accuse Shrem of buying drugs on Silk Road and knowing that Faiella was running an underground bitcoin exchange through the site. They say he also facilitated Faiella’s business and actually processed the bitcoin orders.

Bitcoin-related businesses under fire

The value of bitcoins has been bouncing up and down for nearly the last year. On U.S.-based exchange Coinbase, the digital currency was trading at less than $800 today, although Japanese exchange Mt. Gox had prices listed around $1,000, highlighting how just the slightest bit of news can greatly affect the price of the digital currency.


For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)

About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at

Be the first to comment on "Bitcoin Exchange Operators Charged With Money Laundering"

Leave a comment

Your email address will not be published.