A former Bitcoin Foundation board member and CEO of the now-obsolete exchange BitInstant, Charlie Shrem, has been incarcerated for two years in prison for assisting Silk Road users swap cash for digital currency anonymously. As you will probably be aware, The Silk Road, was an online marketplace that was synonymous with hosting drug and gun sales, which was busted by the FBI in 2013. Shortly after that bust, version 2.0 went online, but it suffered the same outcome.

According to information gathered during the trial, Shrem agreed to partner with Robert M. Faiella to trade over $1 million in cash from buyers. Faiella was the person with direct contact to buyers. He hid behind the name BTCKing in order to post ads promoting his dollar-to-Bitcoin business on the marketplace.

Lawyers for Shrem tried to blame the incident on his youth (Shrem was 22 at the time) and his desire to promote Bitcoin. This didn’t sit well with prosecutors and they claimed that the opportunity to make money drove the scheme.

en.wikipedia.org

He had pleaded guilty back in September but he tried to convince the US District Judge Jed Rakoff not to put him in prison, by promising to ensure nobody follows in his footsteps:

‘I screwed up. 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. 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’.

Judge Rakoff decided that a “substantial prison sentence” was required to serve as a warning to other unlicensed money transmitting businesses.

Despite the initial efforts by Shrem’s to convince the judge not to incarcerate him, he informed Bloomberg that things were better than he expected. Two years is better than six, I suppose.

[Image via wikipedia]

SOURCE: http://www.engadget.com/2014/12/21/bitcoin-charlie-shrem-sentence/?ncid=txtlnkusaolp00000595