The vice chairman of the Bitcoin Foundation was charged by federal prosecutors with conspiring to launder more than $1 million in the virtual currency, the latest in a series of charges and forfeitures tied to the illicit online bazaar Silk Road.
Charlie Shrem, 24, was arrested yesterday at John F. Kennedy International Airport in New York. Shrem, of Cape Coral, Florida, was also chief executive officer of BitInstant, a Bitcoin exchange company. The Bitcoin Foundation was formed to oversee the currency’s software protocol and represents the industry before regulators.
Bitcoin was introduced in 2008 by a programmer or group of programmers under the name Satoshi Nakamoto. It has no central issuing authority, and uses a public ledger to verify encrypted transactions. It has gained traction with merchants selling everything from Sacramento Kings basketball tickets to kitchen mixers on Overstock.com.
“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,” Manhattan U.S. Attorney Preet Bharara said today in a statement. Bitcoin had dropped by 5.8 percent at 12:48 p.m., according to the CoinDesk Bitcoin Price Index.
Shrem has been a prominent Bitcoin evangelist in New York. His company ceased operations around July 2013. Cameron and Tyler Winklevoss, who are currently seeking regulatory approval for a Bitcoin exchange-traded fund, invested $1 million in BitInstant. An e-mail to Winklevoss Capital Management wasn’t immediately returned. The company and its founders, Tyler and Cameron Winklevoss, aren’t under investigation in this case, a person familiar with the matter said.
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