Category Archives: Cyber Crime

US Makes BitCoin arrests

US law enforcers have made arrests of two men accused of operating a Bitcoin exchange in connection with the Silk Road exchange. The Silk Road is part of an ongoing investigation.

Robert Faiella – known as “BTCKing” – and Charlie Shrem from BitInstant have both been charged with money laundering by The Department Of Justice. The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The Silk Road was shut down last October, and its suspected administrator arrested on charges of conspiracy to traffic narcotics. The site’s assets were later seized as part of the ongoing investigation

The United States Justice Department published a statement on their website Monday morning confirming that the two men, Robert Faiella and Charlie Shrem, had been arrested within hours of each other and both charged with one count of conspiracy to commit money laundering and one count of operating an unlicensed money transmitting business. If convicted, the men would face a maximum of 25 years in prison.

“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,” Preet Bharara, the US Attorney for the Southern District of New York, said in Monday’s statement. “Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”

Shrem, the CEO of the Bitcoin exchange service BitInstant, was also charged with one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years.

There is no question that Bitcoin is growing more popular, with one UK university even beginning to use it as a form of payment for some courses, but will it grow into a more legitimate form of currency, or will it continue to be associated with illegal activity?

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