Ex-Bitcoin Foundation Vice Chairman Shrem Denies Charges

Charlie Shrem, the former Bitcoin Foundation Inc. vice chairman, denied charges that he tried to launder more than $1 million in the virtual currency in a case tied to the illicit online bazaar Silk Road.

Shrem, 24, and Robert Faiella, 52, both pleaded not guilty today at a hearing in Manhattan federal court. The two, who entered their pleas through their lawyers, are accused of scheming to sell Bitcoins to Silk Road users to buy illegal drugs.

The case is the latest to be brought by Manhattan U.S. Attorney Preet Bharara stemming from a probe of Silk Road, a sprawling and anonymous black-market bazaar. In another case, Ross William Ulbricht was charged in October with running Silk Road under the alias “Dread Pirate Roberts.”

Faiella’s lawyer, David Braun, has asked to have part of the case dismissed and the rest moved to a federal court in Florida, a request U.S. District Judge Jed Rakoff is weighing.

“No essential elements of conduct of Mr. Faiella occurred in the Southern District of New York,” Braun said in court papers, adding that a Bitcoin exchange service his client is alleged to have used was based in Japan.

Shrem, who lives in New York, is accused of buying illegal drugs on Silk Road along with money laundering. Faiella, a former plumber who lives in Cape Coral, Florida, is also accused of running an underground Bitcoin exchange called “BTCKing.”

Rakoff ordered a two-week trial to start Sept. 22.

Braun and Marc Agnofilo, a lawyer for Shrem, declined to comment after court. Their clients are free on bond. The two 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).

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