Charlie Shrem, a bitcoin trader, was sentenced by a judge to two years of prison time for indirectly assisting the online drug market "Silk Road" by swapping cash for bitcoin.
Silk Road is an online black marketplace where customers can buy different illicit merchandise especially illegal drugs. The Silk Road was shut down after a raid by the Federal Bureau of Investigation and other government agency. Charlie Shrem was caught in the Silk Road raid after trading more than $1 million in equivalent of bitcoin currency. The ruling on Shrem's case also ruled the forfeiture of $950,000 to the United States government.
Charlie Shrem was not directly involved in the illegal trade transactions on Silk Road, however he was charged because of his association with the Robert Faiella who helped create an exchange outlet that lets customers trade their cash to bitcoin currency. In order to purchase or make transactions in Silk Road, a customer is only allowed to use one currency, the bitcoin.
Bitcoin is a software based crypto-currency. It is built within a complex cryptographic system and is administered and maintained by a global network of computers that supervise and authenticate every bitcoin transaction in the whole world.
The judge who passed the sentence said that Shrem was not "some kid making a one-time mistake" but had "excitedly" assisted Faiella in retrieving bitcoin and delivering it to their customers. Robert Faiella on the other hand is waiting for his sentence in Jan. He also pleaded guilty to charges of organizing an illegal money transmitting business.
Prior to Shrem's arrest he is a notable supporter of bitcoin and even served as a vice-chairman of a foundation that laid the groundwork for the development of the virtual currency. Shrem's lawyers said his involvement in the case is only through his fascination of bitcoin rather than interest in the illegal activities undergoing on Silk Road. The government lawyers wanted a penalty of 57 years in jail but the judge only gave a sentence of two years, a penalty which was deemed appropriate.
