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Bitcoin Exec To Spend Two Years Behind Bars For Silk Road Transactions

Posted by samzenpus on from the end-of-the-road dept.

mrspoonsi writes Charlie Shrem, former Bitcoin Foundation board member and CEO of the now-defunct exchange BitInstant, has been sentenced to two years in prison for helping Silk Road users anonymously swap cash for digital currency. Silk Road, as you know, was the online marketplace infamous for hosting anonymous drug and gun sales that was busted by the FBI back in 2013. A version 2.0 went up shortly after that, but it suffered the same fate as its predecessor this November. Based on evidence gathered during the crackdown, Shrem agreed to partner with Robert M. Faiella to trade over $1 million in cash from buyers. Faiella was the one with direct contact to buyers, hiding behind the name BTCKing to post ads promoting his dollar-to-Bitcoin business on the marketplace.

10 of 69 comments (clear)

  1. Sorry, not corporate enough. by Anonymous Coward · · Score: 5, Insightful

    If he worked for HSBC, he wouldn't even have been charged.

    1. Re: Sorry, not corporate enough. by bill_mcgonigle · · Score: 5, Informative

      You're probably unaware that the GP specifically used 'HSBC' because they were caught laundering trillions of dollars of drug money and nobody was indicted. It's no crime to be ignorant of such things, but just try not to hold any policy positions on the subject.

      --
      My God, it's Full of Source!
      OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
    2. Re: Sorry, not corporate enough. by IamTheRealMike · · Score: 3, Informative

      You're probably unaware that the GP specifically used 'HSBC' because they were caught laundering trillions of dollars of drug money and nobody was indicted.

      He probably isn't unaware of that. He may well have actually read the indictment itself or a detailed summary of it, which made clear that the US case was very weak to the point of hardly working at all. In particular, not only did they fail to clearly establish that drug money was really moving (their case was "there is so much cash, some of it must be from cartels") but in particular they failed to show intent by HSBC execs to help drug cartels. Actually their case boiled down to HSBC didn't try hard enough, they weren't suspicious enough, etc. (I'm ignoring the Iranian transactions here which gets into issues of international jurisdiction, as you only brought up drugs).

      The reason you think the are guilty is twofold. Firstly US anti money laundering laws are unbelievably extreme. The PATRIOT Act removed the need to have intent to be found guilty of money laundering. Bankers can now be found guilty of AML violations even if they genuinely tried hard and had no intent to break the law. Hence the accusations from the DoJ that were of the form "HSBC should have designated Mexico as high risk", etc. Secondly as part of the plea agreement HSBC had to act guilty and accept whatever the DoJ said about them. So you only heard one side of the story, the prosecutions side (except there was no court case). No surprises that you think the whole thing is cut and dried.

      It's no crime to be ignorant of such things, but just try not to hold any policy positions on the subject.

      Given that there was never any court case and HSBC was never able to defend themselves, pretty much everyone is ignorant in this case because we never heard the full story. But I'm pretty sure if DoJ had emails from HSBC execs that looked like the ones from BitInstant there would indeed have been prosecutions.

    3. Re: Sorry, not corporate enough. by sjames · · Score: 3, Interesting

      Google around. How about the special cash boxes built specifically to maximize the amount that could be shoved through the cutout in a teller's window. That's a BIG heap of cash being deposited frequently. Exactly the sort of thing that is supposed to trigger suspicion.

  2. Trade $1,000,000 by serviscope_minor · · Score: 4, Insightful

    Help trade $1,000,000 for people to buy drugs for personal use: 2 years in prison.

    Help trade $10,000,000,000 to help drug cartels launder money: er not sure. Remind me what happened to the HSBC execs again...

    --
    SJW n. One who posts facts.
  3. Re: Just bought boughtcoims by Anonymous Coward · · Score: 3, Funny

    Yes. Sell them and buy rubles.

  4. Bitcoin Exec ?!? by Adeptus_Luminati · · Score: 4, Insightful

    Bitcoin Exec? Really? Is that like the Bitcoin CEO the media was reporting on earlier this year? C'mon slashdot... How about some accuracy in your headlines for a change?

    There is no Bitcoin Exec because bitcoin is not a corporation. There are thousands of bitcoin related companies, but they each have their name. So maybe a title of "Bitinstant Exec..." would have been more accuracy.

    --
    No trees were killed in the making of this post; however, many trillions of electrons were horribly inconvenienced.
  5. Wrong on the guns by stevegee58 · · Score: 4, Interesting

    Get your facts straight people. Silk Road did not sell guns.
    Granted it was allowed at first, but SR distanced themselves from firearms and hadn't allowed their sale for some time at the time of the raid.

    1. Re:Wrong on the guns by IamTheRealMike · · Score: 3, Informative

      Silk Road did a spinoff where guns were being sold as the primary goods (the Armory) and they closed it because it wasn't profitable enough.

  6. Re: Bitcoin =! anonymous. by Anonymous Coward · · Score: 3, Funny

    Slashdot is not the place where I would expect != to be misspelled.