A U.S. attorney in the Southern District of New York said Shrem (CEO of Bitcoin exchange BitInstant), along with alleged co-conspirator Robert Faiella, sold more than $1 million worth of bitcoins to Silk Road customers. Faiella, a Florida man who allegedly runs an underground Bitcoin exchanger using the alias BTCKing, was also arrested.
The fallout continues in the Silk Road saga. Is it even possible for a Bitcoin exchange to know they are "laundering" money for Silk Road customers? What does being charged with running an unlicensed money transmitting business say for the future of Bitcoin, at least in the U.S.?
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