BitInstant CEO and Bitcoin Foundation Vice Chairman Charlie Shrem Arrested in New York

Charlie_Shrem_2013Shrem, the Vice Chairman of the Bitcoin Foundation and CEO of currently shuttered Bitcoin exchange, BitInstant, has been arrested.

Police arrested Shrem at JFK airport in New York yesterday, on charges of money laundering and acting as an unlicensed money transmitter.

It is alleged that Shrem sold / laundered Bitcoin in excess of $1 million for users of narcotics bazaar, Silk Road.

Robert M. Faiella, a private Bitcoin exchanger known online as BTCKing, was also arrested today at his Florida home. He is facing similar charges.

Shrem is facing a maximum sentence of 30 years in prisoin, Faiella 25 years. Shrem is facing the extra 5 years for an additional charge of violating the Bank Secrecy Act. Allegedly, he neglected to report potentially unlawful transactions which Faiella may have conducted through BitInstant.

I’m no lawyer, but it’s unclear to me how either man can be blamed for what their customers chose to do with their virtual cash.

This story of Shrem’s early success with Bitcoin depicts him as a likeable guy who colours outside the lines a bit, but certainly no villain. Perhaps if he had Jamie Dimon’s wealth and connections, he’d have gotten a slap on the wrist instead of the bracelets?