Charlie Shrem, the 24-year-old CEO of New York-based Bitcoin exchange BitInstant, was arrested Monday and charged with money laundering. According to a TIME report, Shrem helped Robert Faiella, a 52-year-old Florida man, sell more than $1 million worth of Bitcoins to Silk Road users, who then used the virtual currency to buy illegal goods like drugs from the online black market.
Shrem is a well known advocate of Bitcoin. He is the vice chairman of the Bitcoin Foundation, one of the currency's biggest advocates, and is also a part-owner of EVR, a New York bar which accepts Bitcoins as payment.
Shrem’s Bitcoin exchange company BitInstant is funded by well-known Silicon Valley investors Cameron and Tyler Winklevoss. They invested as much as $1.5 million in the company last year. The Winklevoss brothers said in a statement that they are deeply concerned about Shrem's arrest, and they "fully support any and all governmental efforts to ensure that money laundering requirements are enforced".
Shrem was arrested Sunday at J.F.K international airport in New York, while Faiella was arrested Monday at his home in Cape Coral, Florida. Besides money laundering, Shrem is also charged with operating an unlicensed money transmitting business and willful failure to file suspicious activity report. While Faiella, who operated under the name “BTCKing”, is charged with money laundering and unlicensed money transmitting.