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the virtual currency (worth over $130
It was only on Jan. 16, 2014, that the attorney million) were taken from Ulbricht's
personal computer hardware.
general's office in the southern district of New
York reported it had seized millions of dollars The bitcoin seizures came in
connection with a Sept. 30, 2013, civil
in bitcoin from the illicit drug trafficking action in which all of Silk Road's assets
website known as Silk Road. were forfeited to the government,
including the website, where only
bitcoin was accepted as payment for
alleged drug purchases, purportedly
On Feb. 7, 2014, Mt. Gox stopped users from making withdrawals because of a because bitcoin users can buy and sell
technical malfunction. Only the previous day, Russia had pronounced bitcoin the currency anonymously.
and other virtual currencies illegal.
The road to ruin
The resulting 8 percent drop in bitcoin's value mirrors the 40 percent plummet
in the value of bitcoin following the early December 2013 decision by China to On Jan. 24, 2014, Bharara posted
not allow its network of banks to deal in the cryptocurrency. However, bitcoin's criminal indictments against Robert
value subsequently bounced back 30 percent. M. Faiella, an alleged underground
bitcoin exchanger, and Charlie
Bitcoin in the Big Apple Shrem, Chief Executive Officer
and Compliance Officer of bitcoin
It was only on Jan. 16, 2014, that the attorney general's office in the southern exchange company BitInstant. The
district of New York reported it had seized millions of dollars in bitcoin from attorney general said Faiella ran his
the illicit drug trafficking website known as Silk Road. Additionally, authorities operation via the Silk Road website
confiscated the personal stash of bitcoin from Silk Road's owner and operator, from about December 2011 to October
Ross William Ulbricht. 2013, where he allegedly exchanged
over $1 million worth of bitcoin in the
According to the attorney general, Preet Bharara, about 29,655 bitcoin units trafficking of narcotics.
(worth approximately $28 million) were seized and an additional 144,336 of
Faiella reportedly employed Shrem's
New York City-based company to
exchange bitcoin for U.S. dollars. The
attorney general said Shrem knew
that Faiella's bitcoin transactions
were drug related, but did not alert
authorities because the high-dollar
transactions were lucrative for the
company.
Shrem, who was also an executive
at bitcoin advocacy group Bitcoin
Foundation, was furthermore
charged with failing to file suspicious
activity reports (SARs) against
Faiella's activities.
The Bank Secrecy Act mandates
that money transmitters, such as
banks, credit unions and money
transfer businesses, file SARs to
the Financial Crimes Enforcement
Network (FinCEN). Any enterprise
whose business involves the
exchange of bitcoin is considered a
money transmitter by FinCEN and is
required to follow its AML policies,
including the filing of SARs.
Four days after the attorney general
charged Faiella and Shrem, New York
State's Superintendent of Financial
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the virtual currency (worth over $130
It was only on Jan. 16, 2014, that the attorney million) were taken from Ulbricht's
personal computer hardware.
general's office in the southern district of New
York reported it had seized millions of dollars The bitcoin seizures came in
connection with a Sept. 30, 2013, civil
in bitcoin from the illicit drug trafficking action in which all of Silk Road's assets
website known as Silk Road. were forfeited to the government,
including the website, where only
bitcoin was accepted as payment for
alleged drug purchases, purportedly
On Feb. 7, 2014, Mt. Gox stopped users from making withdrawals because of a because bitcoin users can buy and sell
technical malfunction. Only the previous day, Russia had pronounced bitcoin the currency anonymously.
and other virtual currencies illegal.
The road to ruin
The resulting 8 percent drop in bitcoin's value mirrors the 40 percent plummet
in the value of bitcoin following the early December 2013 decision by China to On Jan. 24, 2014, Bharara posted
not allow its network of banks to deal in the cryptocurrency. However, bitcoin's criminal indictments against Robert
value subsequently bounced back 30 percent. M. Faiella, an alleged underground
bitcoin exchanger, and Charlie
Bitcoin in the Big Apple Shrem, Chief Executive Officer
and Compliance Officer of bitcoin
It was only on Jan. 16, 2014, that the attorney general's office in the southern exchange company BitInstant. The
district of New York reported it had seized millions of dollars in bitcoin from attorney general said Faiella ran his
the illicit drug trafficking website known as Silk Road. Additionally, authorities operation via the Silk Road website
confiscated the personal stash of bitcoin from Silk Road's owner and operator, from about December 2011 to October
Ross William Ulbricht. 2013, where he allegedly exchanged
over $1 million worth of bitcoin in the
According to the attorney general, Preet Bharara, about 29,655 bitcoin units trafficking of narcotics.
(worth approximately $28 million) were seized and an additional 144,336 of
Faiella reportedly employed Shrem's
New York City-based company to
exchange bitcoin for U.S. dollars. The
attorney general said Shrem knew
that Faiella's bitcoin transactions
were drug related, but did not alert
authorities because the high-dollar
transactions were lucrative for the
company.
Shrem, who was also an executive
at bitcoin advocacy group Bitcoin
Foundation, was furthermore
charged with failing to file suspicious
activity reports (SARs) against
Faiella's activities.
The Bank Secrecy Act mandates
that money transmitters, such as
banks, credit unions and money
transfer businesses, file SARs to
the Financial Crimes Enforcement
Network (FinCEN). Any enterprise
whose business involves the
exchange of bitcoin is considered a
money transmitter by FinCEN and is
required to follow its AML policies,
including the filing of SARs.
Four days after the attorney general
charged Faiella and Shrem, New York
State's Superintendent of Financial
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