Bitcoin Exchange BitInstant CEO Arrested on Money Laundering Charges

The U.S. continues to be a less and less friendly place to do Bitcoin related business, with this awful report from Business Insider this morning:

The CEO of BitInstant, a Bitcoin exchange, has been arrested at JFK airport and charged with money laundering.

Charlie Shrem, along with a co-conspirator, is accused of selling over $1 million in bitcoins to Silk Road users, who would then use them to buy drugs and other illicit items.

According to the criminal complaint, Shrem himself bought drugs on Silk Road.

"Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way," DEA agent James Hunt said in a release. 

Shrem is a vice chairman at the Bitcoin Foundation. He is listed as a speaker at a Bitcoin conference in Miami that ended Sunday.

Shrem is believed to own a substantial amount of bitcoins.

BitInstant, which is backed by the Winklevoss twins, is currently offline. It was recently the subject of a class-action suit alleging misrepresentation of its services.

The Business Insider story contains a full press release from the Justice Department.

I wrote back in May about how, although there is no way for the government to destroy the decentralized Bitcoin network, it can certainly do its worst to hobble those trying to use the digital currency. And it is, alas.

I blogged about Shrem himself last month.