Indicted Bitcoin Executive Resigns from Foundation's Board

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Charlie Shrem, the digital currency entrepreneur indicted on money laundering charges, has resigned as vice chairman of the Bitcoin Foundation.

The decision was mutual, says Jon Matonis, the foundation's executive director, in a press release set for release Tuesday afternoon.

"We need to remain focused on our core mission to standardize, protect and promote the Bitcoin core protocol," says Matonis (who is a former columnist for American Banker's BankThink blog). "While Charlie has contributed a great deal of personal effort and resources to enhance the adoption of Bitcoin worldwide, a prolonged legal dispute would inevitably detract from advancing that core mission."

The Department of Justice announced Monday it had charged Shrem, founder of the defunct startup BitInstant, with conspiring to launder $1 million for users of the Silk Road, an online illicit drug market the feds closed last year. He is also accused of running an unlicensed money transmitter business; and failing to file a suspicious activity report. A prominent figure in the Bitcoin community, the 24-year-old faces up to 30 years in prison if convicted.

Shrem's lawyer, Keith Miller, would not comment on the government's allegations Tuesday.

"We are both surprised and saddened to learn of these allegations," the Bitcoin Foundation says in its press release. "The foundation does not condone illegal activities and values transparency, accountability and a high level of responsibility." The group was formed in 2012 to promote the digital currency and payment system.

The indictment of Shrem and another man allegedly involved in laundering money for Silk Road users surfaced a day before the New York Department of Financial Services convened hearings on whether to require special "BitLicenses" for virtual currency firms.

At the first hearing Tuesday, the department's superintendent, Benjamin Lawsky, said he expects to propose new regulations this year.

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Law and regulation