Former Bitcoin Foundation Exec Sentenced for Black Market Cash Exchange on Silk Road

Former Bitcoin Foundation executive Charlie Shrem sentenced to two years in prison on Friday.

Cheryl Kemp

December 22, 2014

2 Min Read
Former Bitcoin Foundation Exec Sentenced for Black Market Cash Exchange on Silk Road
(Photo by Zach Copley via Flickr).



This article originally appeared at The WHIR

Charlie Shrem, a former Bitcoin Foundation executive, was sentenced to two years in prison on Friday. He pled guilty earlier this year for aiding and abetting an unlicensed money transmitting business. In 2012, Shrem indirectly helped send one million dollars of bitcoin digital currency on the TOR site Silk Road. Robert Faiella, who was the other party involved in the transaction, pleaded guilty to operating an unlicensed money transmitting business and will be sentenced in January.

Over 400 additional TOR sites selling drugs, guns and a number of other illegal goods and services were taken offline by law enforcement in early November. The original Silk Road was shut down by the FBI in 2013. Ross Ulbricht, the alleged operator, is scheduled to face trial in January and has pleaded not guilty. Bitcoins seized during the Silk Road investigation were auctioned off in early December by US Marshals. Blake Benthall, the alleged operator of the followup site Silk Road 2.0 has also been charged by the FBI.

“I screwed up,” Shrem told US District Judge Jed Rakoff. “The bitcoin community, they’re scared and there is no money laundering going on any more. They’re terrified. Bitcoin is my baby, it’s my whole world and my whole life, it’s what I was put on this earth to do,” said Shrem in a Bloomberg article. “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.”

According to Bloomberg, US District Judge Jed Rakoff said Shrem had committed a serious crime and that the prison term was warranted. “There’s no question that Mr. Shrem, over a period of many months, was knowingly, wilfully, to some extent excitedly and even passionately involved in activities he knew were, in part, involved in serious violations of the law,” the judge said. He is also required to forfeit $950,000 to the US government.

On Friday Shrem tweeted, “I’ve been sentenced to two years, to self surrender in 90 days. Considering I was facing 30 years, justice has been served. #Bitcoin.” Since then, he has received a lot of support through Twitter and the hashtag #freeshrem is being used to express disagreement with the sentence.

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