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Bitcoin promoter pleads guilty in Silk Road case

Promoter pleads guilty to illegal use of currency.

The State Column, Ella Vincent | September 05, 2014

A Bitcoin promoter has pleaded guilty to sending the digital currency to illegal marketplace Silk Road. Charlie Shrem entered the plea in a New York federal court.

Shrem was charged with one count of aiding and abetting an unlicensed money transmitting business. Shrem is a promoter and co-founder of the online currency.

Bitcoin is a digital currency in which users exchange payment using a public ledger. Shrem pled guilty to helping send more than $1 million in Bitcoin to users of the controversial website Silk Road. A co-defendant, Robert Faiella, also pled guilty to operating on the Silk Road website.

Silk Road is a “deep web” or underground website where users can anonymously buy illegal drugs. The website was temporarily shut down by federal authorities last fall.

Prosecutors said Faiella operated a bitcoin exchange on Silk Road for two years using the name “BTCKing”. Faiella provided the currency for users involved in selling and buying drugs.

Shrem processed transactions for Faiella through the digital currency. Even though he knew the bitcoin would be used on Silk Road, he admitted in court to processing the transactions.

“I knew that much of the business on Silk Road involved the buying and selling of narcotics,” said Shrem. “I knew that what I was doing was wrong.”

Faiella also admitted to his wrongdoing. When asked by U.S. District Judge Jed S. Rakoff if he knew that his Bitcoins would be used to buy and sell drugs and that it was illegal, he said, “Absolutely.”

“Robert Faiella and Charlie Shrem opted to travel down a crooked path — running an illegal money transmitting business that catered to criminals bent on trafficking narcotics on the dark web drug site, Silk Road,” said U.S. Attorney Preet Bharara in a statement. “The approximately $1 million in Bitcoins Faiella and Shrem sold to these outlaws cost them a lot more than they bargained for and bought them today’s convictions.”

Faiella and Shrem face up to five years in prison when they are sentenced in January 2015

http://www.statecolumn.com/2014/09/bitcoin-promoter-pleads-guilty-in-silk-road-case/