| NEW YORK, April 14
NEW YORK, April 14 Prominent bitcoin
entrepreneur Charlie Shrem has been indicted by a federal grand
jury in New York on charges of funneling cash to the illicit
online marketplace Silk Road.
Shrem, known as one of the digital currency's most visible
promoters, is accused of conspiring with a Florida man, Robert
Faiella, to sell more than $1 million in bitcoins to the users
of Silk Road despite knowing that it would be spent on illegal
uses like drug trafficking.
Both Shrem and Faiella face charges of money laundering,
conspiracy and failing to file suspicious activity reports with
government banking authorities, according to the indictment
filed by Manhattan U.S. Attorney Preet Bharara.
Shrem's lawyer, Marc Agnifilo, and Faiella's lawyer, David
Braun, did not immediately respond to a request for comment on
Federal authorities shut down Silk Road last year, and
prosecutors from Bharara's office have charged Ross William
Ulbricht with operating the site under the name "Dread Pirate
Shrem, 24, was arrested in January and stepped down as vice
president of the Bitcoin Foundation, a well-known trade group,
soon after. He was previously CEO of BitInstant, a bitcoin
exchange company that enjoyed financial backing from the twins
Cameron and Tyler Winklevoss but closed last year.
Bitcoin is a digital currency, not backed by any government
or central bank, that fluctuates in value according to its
users' demand. Users can transfer bitcoins to each other online
and store the currency in digital "wallets."
Authorities have vowed to pursue those who use bitcoin to
complete illegal transactions, while regulators are still
grappling with their approach to the nascent currency.
The recent failure of Japan's Mt. Gox, which filed for
bankruptcy after apparently losing hundreds of millions of
dollars worth of bitcoins, has underscored concerns about the
currency's long-term viability.
Shrem will be arraigned on the indictment on April 29,
according to Bharara's office. He faces a maximum prison term of
20 years if convicted on the most serious charge.
(Editing by Eric Walsh)