Sun, Aug 31, 2014 - Page 13 News List

Bitcoin pioneer reaches US plea deal

Reuters, NEW YORK

A bitcoin mining machine and a paper wallet with QR codes are pictured at La Maison du Bitcoin in Paris on July 11.

Photo: Reuters

Bitcoin entrepreneur Charlie Shrem has reached a plea deal to resolve US charges that he was involved in a scheme to sell over US$1 million of the digital currency to users of illicit online marketplace Silk Road, his lawyer said on Friday.

The former vice chairman of the Bitcoin Foundation is to plead guilty next Thursday in a New York federal court to unlicensed money transmission, his lawyer Marc Agnifilo said in an e-mail.

Prosecutors had previously charged Shrem with operating an unlicensed money transmitting business, money laundering conspiracy and failing to file suspicious activity reports with government banking authorities.

Federal authorities shut down the Web site known as Silk Road last year, though a new Internet marketplace under the same name was launched in November. Prosecutors contend Silk Road enabled users to buy and sell illegal drugs and other illicit goods and services.

Soon after his arrest in January, Shrem stepped down from his role at the Bitcoin Foundation, a well-known trade group. He was previously chief executive officer of BitInstant, a bitcoin exchange company.

A notice of a plea hearing in the case of Shrem and his co-defendant Robert Faiella was included in a calendar distributed by court officials earlier on Friday.

It was not immediately clear if Faiella, a Florida man who faced similar charges to Shrem, plans to plead guilty or move ahead with a trial on Sept. 22. He has previously pleaded not guilty.

Faiella, 54, is expected to fly to New York for the hearing, according to a court order filed on Friday.

A lawyer for Faiella did not respond to requests for comment. A spokesman for Manhattan US Attorney Preet Bharara declined to comment.

Prosecutors are pursuing a separate case against Ross William Ulbricht, the man accused of creating and operating Silk Road under the name “Dread Pirate Roberts.” He is set to face trial on Nov. 3.

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