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U.S. Charges Bitcoin Exchangers Linked to Silk Road Drug Bazaar

Bama Diva
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Post by Bama Diva on Mon 27 Jan 2014, 5:36 pm

First topic message reminder :

U.S. Charges Bitcoin Exchangers Linked to Silk Road Drug Bazaar

By Matt Egan  

Published January 27, 2014 

FOXBusiness

Federal prosecutors unsealed criminal charges on Monday against a pair of individuals who they say sold Bitcoins that were later used to buy and sell drugs on Silk Road, signaling a desire by law enforcement to target those who use crypto currencies to facilitate shady activities.

The complaint marks the latest fallout from Silk Road, the online drug bazaar that U.S. authorities shut down last year and later seized millions of dollars worth of Bitcoin from. It also highlights a concerted effort to crack down on those who use Bitcoin to enable illicit activities.

“When Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act,” Manhattan U.S. Attorney Preet Bharara said in a statement. “We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”

This isn’t the first time Bharara’s office has gone after a digital currency. Last year, the U.S. successfully shut down Liberty Reserve, which it accused of handling $6 billion worth of illicit transactions.

“Basically, the government is putting the industry on notice. Either you do what we’re asking for or we’re going to put you out of business,” said Annemarie McAvoy, a former federal prosecutor who is now a professor at Fordham Law School. “They’ve brought two (cases), and I’m sure this is not the last.”

The two individuals named in the charges are Robert Faiella, who prosecutors say was an underground Bitcoin exchanger, and Charlie Shrem, CEO and compliance officer of a Bitcoin exchange company.

Federal prosecutors charged Faiella, 52, and Shrem, 24, with engaging in a scheme to sell more than $1 million of Bitcoins to users of Silk Road. Each defendant was charged with conspiring to commit money laundering, which carries a maximum prison sentence of 20 years. They are additionally charged with operating an unlicensed money transmitting business, which has a max sentence of five years in prison.

The U.S. also charged Shrem with violating the Bank Secrecy Act by “willfully failing” to file suspicious activity reports on Faiella’s questionable transactions. This charge carries a maximum sentence of five years in prison.

The charges highlight how one of the characteristics that makes Bitcoin appealing -- its privacy -- has put the currency in the crosshairs of law enforcement. Last year, a division of the Treasury Department issued new legal guidelines saying exchangers of digital currencies must register as money services businesses and comply with anti-money laundering regulations. “Law enforcement wants to be able to maintain control. They want to be able to follow the money. Here, you can’t – and that’s worrying them,” said McAvoy. In addition to the Manhattan U.S. Attorney, the charges were announced by the Drug Enforcement Agency and the criminal investigation division of the Internal Revenue Service.

“Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way,” said DEA acting special-agent-in-charge James Hunt.
Schrem was apprehended by authorities at JFK International Airport in New York on Sunday and is set to appear in federal court in Manhattan later on Monday. Faiella was arrested at his Cape Coral, Fla., home on Monday and is expected to appear in federal court in the Middle District of Florida.

The court documents allege Faiella operated an underground Bitcoin exchange on the Silk Road website between December 2011 and October 2013 that sold the crypto currency to users who wanted to buy illegal drugs on the site. After receiving orders, he filled them through a New York company designed to enable customers to exchange cash for Bitcoins anonymously, the U.S. alleges.

Shrem served as the New York Bitcoin company’s CEO during much of that timeframe and was “fully aware that Silk Road was a drug-trafficking website” and that Faiella was operating an exchange service for Silk Road users, the documents say.

Prosecutors say Shrem still did business with Faiella to maintain a “lucrative source” of revenue. He personally processed Faiella’s orders, gave him discounts on high-volume transactions, failed to file a single suspicious activity report and even helped Faiella “circumvent” the company’s anti-money laundering policies, the documents allege.

Bharara said the investigation remains ongoing.

The value of Bitcoin tumbled in October  following the FBI raid of Silk Road, which resulted in the forfeiture of about 29,655 Bitcoins. The action underscored the legal and regulatory concerns that continue to dog Bitcoin  even as its value has surged over the past two years

http://www.foxbusiness.com/technology/2014/01/27/us-charges-bitcoin-exchangers-linked-to-silk-road-drug-bazaar/
Franky
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Post by Franky on Fri 31 Jan 2014, 3:21 pm

bounce  bounce Be careful MB.... Get the "old farts" mad at you!!!
Diamond
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Post by Diamond on Sat 01 Feb 2014, 5:12 am

Well this old fart will bow out to the infinate wisdom of the younger generation, now i have to live in more of this messed up world from the new generation, but yall should get along fine with the O lovers in this world, tootle-loo buckaroo i'm thru with ya JR lol  hi  8)
Franky
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Post by Franky on Sat 01 Feb 2014, 9:04 am

@Diamond wrote:Well this old fart will bow out to the infinate wisdom of the younger generation, now i have to live in more of this messed up world from the new generation, but yall should get along fine with the O lovers in this world, tootle-loo buckaroo i'm thru with ya JR lol  hi  8)
you just go right on there....keep doing what you been doing and you'll keep getting what you been getting!  keep me infoarmed on the RV im dying to know !
Diamond
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Post by Diamond on Sat 01 Feb 2014, 9:22 am

What ive done an am doin works just fine an have never had to ask for your help, cause you just waitin on RVjust like me, so if you've done so much in this world, it should keep you to busy to worry about what i think or believe!!! syl twinkles
Franky
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Post by Franky on Sat 01 Feb 2014, 10:23 am

You can count on I'm not worry about what you doing! Did! or gonna do! from now till the end of your or my life! Ive been stating facts about looking at other opportunity's! you the one starting saying these "youngsters" and all the other stuff! if the Dude that invented the Gun would have stopped cuz people said it wouldn't work, or if the dude that invented the light bulb would have stopped...or Gates would have stopped!! you would be picking your nose in the dark, without the ability to tell me and 100 other people how bad this or that thing was and let us know what you been doing is SO working!!  lol so go on with your bad self!  syl Dingle Balls!!
Franky
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Post by Franky on Sat 01 Feb 2014, 10:31 am

In short.. Dont make fun of the People that might be trying to figure (invent) a better way of life for themselves!! and for the future Generations!! just because you don't see it!! dosen't mean its not a good thing!! if you are truly concerned about it being a hurtful thing to the human race...you don't try and make them feel like there stupid for trying! that never HELPS! that tears down!
Franky
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Post by Franky on Sat 01 Feb 2014, 10:32 am

@Diamond wrote:What no comment from the bitcoin bandits? :pirat:
Like this!!  lol
Franky
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Post by Franky on Sat 01 Feb 2014, 10:33 am

@Diamond wrote:Well you youngsters should realize, with age comes wisdom, but i was like ya'll at one time an thought i knew more than everyone else an had to learnonly see what you want to see!!!!!!!  :(  :(
and this  lol
Franky
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Post by Franky on Sat 01 Feb 2014, 10:42 am

@Diamond wrote:Well this old fart will bow out to the infinate wisdom of the younger generation, now i have to live in more of this messed up world from the new generation, but yall should get along fine with the O lovers in this world, tootle-loo buckaroo i'm thru with ya JR lol  hi  8)
All THIS is what got this Whole thing going if you forgot!!

Some people have a case of Stinking Thinking and need a Check up from The Neck up!!


I'm NOT going to let UP...shut UP...give UP...Till I'm taken UP!!
IN FACT I'M JUST GETTING WARMED UP!!
Franky
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Post by Franky on Sat 01 Feb 2014, 11:42 am

Some people say to leave the past in the past but sometimes you have to stare the past right in its face cause its what made you who you are today!

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