One of the most prominent players in the Bitcoin universe, Charles Shrem, was arrested on Sunday and accused of helping grease the wheels for drug transactions on the now defunct online bazaar Silk Road.
Mr. Shrem was the founder and chief executive of a popular website, Bitinstant, where Bitcoins could be bought using dollars. The criminal charges unsealed on Monday allege that Mr. Shrem used his company to convert money anonymously for people interested in buying narcotics on the Silk Road site, and also personally bought drugs on the site. He was arrested at John F. Kennedy Airport.
The scheme was allegedly operated in cooperation with another man, Robert Faiella, known as BTCKing, who was arrested on Monday.
The Fed starts their attack on the bitcoin? or just the obvious use of the cryptocoin in illegal activities
The BitInstant exchange, based in New York City, lets people buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. It received a $1.5 million investment last year from Cameron and Tyler Winklevoss.
Could be these guys were "bought off" by a global banking organization.
They agree to "take the fall" and get acquitted or plea bargained out later.
The worldwide central banking system doesn't like competition.
They prefer to handle all money laundering on their terms.