Zach Copley Federal prosecutors have charged two men with scheming to sell more than $1 million in bitcoins for use on Silk Road, the online emporium that allowed people to buy and sell illegal drugs anonymously. Robert M. Faiella, 52, of Cape Coral, Florida, operated an underground Bitcoin exchange on Silk Road from 2011 to 2013, according to a criminal complaint unsealed Monday in federal court in Manhattan. Charlie Shrem, 24, of New York City, was allegedly the CEO and chief compliance officer of a Bitcoin exchange company. Together, prosecutors said, the men conspired to launder more than $1 million worth of Bitcoin transactions that flowed over Silk Road, which was shut down in October after allegedly arranging more than $1 billion in sales of heroin and other illicit substances and services to hundreds of thousands of buyers. Faiella, who allegedly operated under the username BTCKing, was arrested Monday at his home, while Shrem was apprehended on Sunday at John F. Kennedy International Airport in New York. Prosecutors said the men earned substantial profits by knowingly facilitating anonymous drug sales on Silk Road, which recognized bitcoins as the sole form of official payment. Prosecutors said Faiella used his BTCKing identity to operate a Bitcoin exchange on Silk Road. To fulfill orders, he relied on a New York-based Bitcoin exchange run by Shrem, according to court documents.

The company, which Business Insider identified as BitInstant, allowed customers to exchange cash for bitcoins anonymously in exchange for a fee. Faiella allegedly fulfilled orders from Silk Road users with the assistance of Shrem’s company, and then he passed along the bitcoins with a further markup.     

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