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    Bitcoin Trader Gets Two Years in Jail for Black Market Transactions

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    Bitcoin transfers allowed users of illegal billion dollar website Silk Road to buy drugs.

    MOSCOW, December 23 (Sputnik) – A former executive of the Bitcoin Foundation has been given a two year prison sentence after facilitating the use of bitcoins on the illegal Silk Road online marketplace, having faced a potential 30 year jail term after exchanging nearly $1 million dollars of cash into Bitcoins.

    "I've been sentenced to 2 years, to self surrender in 90 days. Considering I was facing 30 years, justice has been served. #Bitcoin," wrote Charlie Shrem on his Twitter account after sentencing on Friday.

    Shrem had pleaded to the court for leniency, entreating Judge Jed Rakoff to allow his to serve as a cautionary case for the Bitcoin community, which he said was now "terrified," according to Bloomberg. "There is no money laundering going on any more," he told the judge. "I need to be out there. If your honor grants me that, I can be out there in the world, making sure that people don’t do the same stupid things that I did," he is reported to have said.

    However, the judge did not buy Shrem's defence argument that his was just a youthful indiscretion. "There's no question that Mr. Shrem, over a period of many months, was knowingly, willfully, and to some extent excitedly, even passionately involved in activity that he knew was a serious violation of the law and that was promoting the evil business of trafficking in drugs," the judge said in sentencing in New York.

    As well as serving as Vice Chairman of the Bitcoin Foundation, Shrem was co-founder and CEO of the BitInstant exchange, which was set up in August 2011 as a rapid means of turning traditional funds into Bitcoins, but suspended its operations in July 2013 amid customer complaints about the speed of its payment processing. According to Coindesk.com, in August 2013 three bitcoin users filed a class action against the company claiming misrepresentation about its service.

    Shrem and co-defendant Robert Faiella were arrested in January 2014 on charges of conspiring to commit money laundering and operating an unlicensed money transmitting business, in connection with their activities in enabling Silk Road users to make purchases. Faiella is scheduled to be sentenced on January 20.

    The Silk Road website was founded in 2011 by Ross Ulbricht, alias Dread Pirate Roberts, and was known as the Amazon or Ebay of drug dealing, the trade of which made up 70% of its marketplace. Bitcoin was the only payment method on the website, which used a service similar to Paypal to complete transactions between users.

    According to Business Insider, the illegal site generated revenues of $1.2 billion dollars before being seized by the FBI in October 2011 and its founder arrested. Ulbricht is currently awaiting trial, due to begin in January 2015. A second incarnation of the website, Silk Road 2.0 was shut down by authorities in November 2014.

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    Federal Bureau of Investigation (FBI), bitcoin, Silk Road, charlie shrem, United States
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