New York, NY – The Justice department is reporting that Charlie Shrem, the CEO of BitInstant, was arrested today at the JFK airport in New York. It was reported that he was charged with money laundering with a co-conspirator in selling over $1 million in bitcoins to users of Silk Road. Silk Road is an underground website where bitcoin currency is used to purchase drugs and other items anonymously.
In addition to charges of supplying bitcoin to Silk Road users, Shrem is being charged personally for using bitcoin on Silk Road to purchase illegal drugs himself. In the report from DEA Special Agent James J. Hunt, it was also noted that there was a second man charged and arrested in Florida today by the name of Robert Faiella. Mr. Faiella worked directly with Shrem to sell bitcoins to anonymous users at a markup who would turn around and use the bitcoin to purchase all kinds of illegal drugs from Silk Road. This investigation has been going on from 2011 through 2013 and it sounds like a home run for the Justice Department. This arrest is the most recent black eye to BitInstant who has been offline since July 2013 due to a class action law suit that was filed.
Time will tell if BitInstant can turn the company image around, but for the time being they will most likely need to look for a new CEO to replace Shrem while he awaits trial.