Bitcoin Foundation Member Sentenced to Prison

Former Bitcoin Foundation member and founder of now defunct BitInstant Charlie Shrem was sentenced to 2 years of prison time in connection with money laundering activities related to the online marketplace Silk Road. It is imperative to state that Silk Road was an online market place which was busted by the FBI in 2013 as it allowed users to buy drugs and other illegal contrabands online.

There was a sequel to the marketplace which was founded but was busted again by the FBI in November 2014. Evidence presented against Charlie Shrem said that he partnered with one Robert M Faiella to trade one million dollars in cash from buyer. The scheme worked by users depositing cash into bank accounts, Shrem would then use BitInstant to transfer the corresponding amount to Robert Faiella which he’d pass on to the digital wallets of users.

In his defence, Shrems’ council asked the court not to lock him up as the misdemeanor was carried out when his client was in his youth. Shrem was 22 years when the crime was carried out. Shrem claimed that he “screwed up” and that by locking him up, the courts would bring a bad name to the whole Bitcoin industry. He believes that the Bitcoin industry doesn’t involve itself with money laundering activities and many in the industry are doing whatever they can to make the digital currency a more accessible form of legal currency.

Shrem would spend 2 years in prison and would forfeit $950,000. Many industry experts are seeing this judgment as a huge negative for the Bitcoin industry as they believe that it brings bad publicity to the industry and hurts its credibility in front of users. Industry experts believe that as it is 2014, has its own share of bad stories for the industry and this one doesn’t augur well for the industry too.