There’s no denying bitcoin has a shady reputation. The virtual currency known for being hard to trace first came to the limelight with the unveiling of Silk Road, an online black market for illegal drugs. Not helping bitcoin’s standing, 24-year-old Charlie Shrem, former vice chairman of the Bitcoin Foundation and CEO of the now-defunct exchange BitInstant, pleaded guilty in a New York federal court on Thursday to one count of aiding and abetting an unlicensed money transmitting business.
Shrem, whose startup was backed by entrepreneur brothers Cameron and Tyler Winklevoss, was arrested in January at John F. Kennedy International Airport on money-laundering charges. Authorities said he and 52-year-old Robert Faiella, who separately pleaded guilty to the same charge, were involved in a scheme to sell $1 million in bitcoin on Silk Road. Shrem’s lawyer emphasized that his client did not directly supply the digital currency to users of the underground marketplace. As part of the plea deal, both Shrem and Faiella agreed to forfeit $950,000 to the government to avoid the case going to trial.
“I knew that much of the business on Silk Road involved the buying and selling of narcotics,” Shrem said in statement in court. “I knew that what I was doing was wrong.”
In a statement, Manhattan U.S. Attorney Preet Bharara said: “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.”