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BitInstant.com founder arrested for conspiracy, money laundering

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El Diablo
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#1

Posted 28 January 2014 - 10:26 AM Edited by El_Diablo, 28 January 2014 - 10:29 AM.

for anyone still following the Bitcoin saga, you'll recall that the Silk Road was shut down and its creator imprisoned by the feds just last year. it's the deep web site that sold drugs and weapons and other black market services the vast majority of which were funded by bitcoin transactions.

 

this week Charlie Shrem was arrested in New York.

Charlie was the founder of Bit Instant which was a website that offered immediate funding of bitcoin accounts for anonymous transaction. federal investigators have tied Bit Instant's employee accounts to the funding of Silk Road virtual wallets. and Charlies site was by far the most prolific provider of cash-bitcoin exchanges in the world. during the Summer of 2013, Bitinstant.com was sustaining an average of 30,000 cash-bitcoin transactions per month.

 

alleging that Bit Instant was unable to meet demand, money laundering schemes were carried out in partnership with Silk Road accounts to move large amounts of digital currency through high volume sales on the deep web. for an even more entertaining twist, Bit Instant had recently received over a million dollars from the Winklevoss twins investment firm. you know, those 2 guys who say Facebook was their idea.

 

it wasn't very long ago that Bitcoin and even its most legitimate affiliate services were churning out the newest tech millionaires.

now a handful of the most visible success stories are finding themselves in some seriously hot water.

 

http://www.huffingto..._n_4674148.html

http://techcrunch.co...million-in-btc/

http://www.ibtimes.c...charges-1549047

related article from last year in which Shrem and other 'bitcoin millionaires' talk about their business:

http://www.businessw...in-millionaires


GunWrath
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#2

Posted 29 January 2014 - 09:07 AM

Never even heard of it.. so it must of not been that important.


 dice
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#3

Posted 29 January 2014 - 10:11 AM Edited by dice, 29 January 2014 - 10:17 AM.

Money laundering? pff...

 

The thing that bugs me is that he obviously tried to go the legal way, but is still facing charges of operating an unlicensed money transmitting business and accusations of having the possibility to buy drugs by filling their orders via his own site. Considering the large amount of money they processed every day was he really that oblivious to the growing attention they were receiving or just sloppy?

 

And god I hate these new 'dark web', 'surface web', 'secret internet' phrases, they're so annoying


Polish_Trucker
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#4

Posted 29 January 2014 - 10:13 AM

Well, you could say that was a bit instant news. Get it? Ha. Ha. 

 

I'll leave now.


Mr Rabbit
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#5

Posted 29 January 2014 - 10:20 AM

Well, you could say that was a bit instant news. Get it? Ha. Ha. 

 

I'll leave now.

Your avatar is very appropriate for that post.

 

This does not surprise me in the slightest.


DeafMetal
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#6

Posted 29 January 2014 - 02:12 PM

What a dumbass. He had a great idea and completely f*cked it up.


Mr. House
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#7

Posted 29 January 2014 - 02:47 PM

Money laundering? pff...

 

The thing that bugs me is that he obviously tried to go the legal way, but is still facing charges of operating an unlicensed money transmitting business and accusations of having the possibility to buy drugs by filling their orders via his own site. Considering the large amount of money they processed every day was he really that oblivious to the growing attention they were receiving or just sloppy?

 

And god I hate these new 'dark web', 'surface web', 'secret internet' phrases, they're so annoying

Yeah I mean, big multi billion dollar corporations don't launder money, right? The real problem was that Mr Bitlord's business wasn't big enough to pay the extortion bills to continue laundering.

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El Diablo
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#8

Posted 29 January 2014 - 09:04 PM

What a dumbass. He had a great idea and completely f*cked it up.

it's an interesting situation because when he started that company, everything he was doing was above board.

 

Bit Instant could fund bitcoin accounts for anything. most of their transactions were probably perfectly legal... before they got involved with Silk Road.

the allegation is basically that Bit Instant knew it was working with Silk Road to host illegal sales even though BI claims everything was anonymous.

 

can't blame him though.

like most tech startups he just saw an opportunity and ran with it before they were any real regulations in place. he wasn't trying to be a criminal. and there were other tech companies doing what he did, but some of those people went ahead and cashed out their bitcoins before they became the favorite currency of the black market. this guy stayed in the game and tried to capture the most market share possible.

 

in the end they cast their net too wide, too soon.

they saw those dollar signs and couldn't help themselves.


Mick.
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#9

Posted 29 January 2014 - 11:35 PM

Damn it. I guess my order of a ten strip ain't coming.

Finn 7 five 11
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#10

Posted 30 January 2014 - 01:00 AM

If there were no real regulations against this sort of thing how is it that they are arrested?


WBaker
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#11

Posted 30 January 2014 - 01:07 AM

Damn it. I guess my order of a ten strip ain't coming.


They gave you what?

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El Diablo
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#12

Posted 30 January 2014 - 01:51 AM

If there were no real regulations against this sort of thing how is it that they are arrested?

because federal investigators were able to link Silk Road transactions to accounts that were funded by Bit Instant.

 

what Bit Instant does is not technically illegal.

but they were funding illegal activity and the feds allege that they knew this.


Finn 7 five 11
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#13

Posted 30 January 2014 - 03:04 AM


If there were no real regulations against this sort of thing how is it that they are arrested?

because federal investigators were able to link Silk Road transactions to accounts that were funded by Bit Instant.
 
what Bit Instant does is not technically illegal.
but they were funding illegal activity and the feds allege that they knew this.

That's not really any different a bank giving me a currency to someone which that someone already owns and then they go and spend it on drugs.

That's stupid, regardless of if they knew what it was being used for.

El Diablo
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#14

Posted 30 January 2014 - 05:48 AM

That's not really any different a bank giving me a currency to someone which that someone already owns and then they go and spend it on drugs.


That's stupid, regardless of if they knew what it was being used for.

oh I see what you're saying.

but there is a difference.

 

you can buy anything with cash that someone else is willing to sell you, naturally.

however if you actually want to go and 'spend it on drugs,' then you're going to have to go find your dealer buddy on the streets or whatever. the bank may have given you your money out of the ATM, but the bank is not officiating the transaction; see what I'm getting at? the bank doesn't know where you go after you've left the teller.

 

the allegation is that Bit Instant knew these accounts were funding Silk Road transactions; and virtually everything on Silk Road is highly illegal.





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