Black eye for Bitcoin: US arrests Bitcoin Foundation exec for money laundering day before hearings

Gigaom

The virtual currency Bitcoin has come a long way in shedding its early reputation as a tool for crime, and now enjoys the support of many respected investors and mainstream businesses. On Monday, however, that reputation suffered a setback as the federal government announced criminal charges against two men who ran the online exchange BitInstant, one of whom is a senior figure in a trade group that lobbies for Bitcoin’s legitimacy.

In a press release, the Manhattan U.S. Attorney’s Office said it is charging Robert Faiella and Charlie Shrem with conspiracy to commit money laundering in relation to their activities on Silk Road, a notorious online bazaar for drugs and other criminal services.

The release said that Shrem was arrested at JFK Airport in New York yesterday and Faiella at his residence in Florida. Both men are expected to attend court hearings today. Shrem’s name is notable because…

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