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Ex-Bitcoin Foundation’s Shrem Indicted After Plea Talks

April 14 (Bloomberg) -- Charlie Shrem, a prominent Bitcoin evangelist, was indicted for allegedly trying to launder more than $1 million in the virtual currency in a case tied to the illicit online bazaar Silk Road.

The indictment came after plea bargaining talks with federal prosecutors in Manhattan ended. Shrem, the former vice chairman of the Bitcoin Foundation, and Robert Faiella, who the U.S. said operated an underground Bitcoin exchange called “BTCKing,” are accused of engaging in a scheme to sell Bitcoins to users of Silk Road for illegal purchases.

Shrem, who was also the chief executive officer of a Bitcoin exchange company called BitInstant, and Faiella were first arrested in January and have been free on bond. They’re charged with two counts of operating an unlicensed money transmitting business, money laundering conspiracy and willfully failing to file suspicious activity reports with banking authorities, according to the April 10 indictment.

The case is the latest to be brought by Manhattan U.S. Attorney Preet Bharara’s office stemming from a probe of Silk Road, a sprawling and anonymous black market bazaar. Ross William Ulbricht was charged in October with running Silk Road under the alias “Dread Pirate Roberts,” and in December, Bharara charged three more former Silk Road employees with helping run the website. All have pleaded not guilty.

Shrem intends to plead not guilty to the indictment when he’s arraigned in two weeks before U.S. District Judge Jed Rakoff, said his lawyer, Marc Agnifilo. David Braun, a laywer for Faiella, declined to comment about his client’s case.

Shrem and Faiella face as long as 20 years in prison if convicted of the most serious charge of conspiracy.

The case is U.S. v. Faiella, 14-cr-00243, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in Federal Court in Manhattan at

pathurtado@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg, Stephen Farr

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