Bitcoin entrepreneurs Charlie Shrem and Robert Faiella charged with money laundering
Both men are accused of conspiring to commit money laundering and operating an unlicensed money transmitting business
Two Bitcoin entrepreneurs have been arrested and charged with money laundering by US authorities.
Charlie Shrem, chief executive of New York-based BitInstant, and Robert Faiella, a virtual currency trader known as BTCKing, allegedly conspired to sell over $1 million Bitcoins (£603,000) to users of black market website Silk Road, who allegedly used the site to buy drugs anonymously.
Silk Road was shut down by the FBI last year.
Shrem, 24, was arrested on Sunday morning at New York's JFK International Airport. Faiella, 52, was arrested on Monday in his Florida home.
In the federal criminal complaint, both men are accused of conspiring to commit money laundering, and operating an unlicensed money transmitting business.
Shrem is also accused of failing to report Faiella's illegal transactions, violating the Bank Secrecy Act, which requires financial institutions to alert authorities of suspicions of money laundering.
US Attorney for Manhattan Preet Bharara said in a statement: "As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the Dark Web drug site, Silk Road.
"Truly innovative business models don't need to resort to old-fashioned lawbreaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act."
Tyler and Cameron Winklevoss - the millionaire twins who sued Mark Zuckerberg claiming Facebook had been their idea- told the BBC they were "deeply concerned" about the allegations.
The Winklevoss brothers invested in the Bitcoin exchange in 2012 and led a capital raising effort that raised $1.5 million last year.
They said: "When we invested in BitInstant in the fall of 2012, its management made a commitment to us that they would abide by all applicable laws - including money laundering laws - and we expected nothing less.
"We are obviously deeply concerned about (Shrem's) arrest. We were passive investors in BitInstant and will do everything we can to help law enforcement officials."
Full indictment here
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