Charlie Shrem, a long time bitcoin advocate and CEO of Bitinstant was arrested in New York on January 27, 2014.
Bitinstant was a system to help exchange cash into bitcoins, but has been inactive for a long time as they tried to climb US regulatory hurdles.
Now it’s alleged that Charlie helped someone get bitcoin, who then sold the bitcoin to others to use on Silk Road, an illegal goods marketplace that was shut down last year. Charlie may have given the middle-man advice on how to keep the transactions low enough as to not draw attention….
News of the arrest has caused a price drop in Bitcoin to around US$760, that’s about 10% below where it was yesterday.
What I find interesting is that this is a much lower % drop from when Silk Road was shut down (75% drop) or when China tightened up (50% drop).
It seems to me that the overall stability of the price is occurring as more and more people own Bitcoin.
It’s also important to note that the vast majority of people who are using Bitcoin are not using them for illegal activities. As a member of society, it’s important for any business to bring it to the attention of authorities if we are aware that someone is using a product we provide for illegal purposes.
If anything, the arrest shows that Bitcoin is easier to trace than cash and helped investigators find those involved. If the alleged perpetrators had used cash instead of Bitcoin, there would be no transaction record. Bitcoin leaves a ledger account of transfers which can aid authorities.
Let’s not forget that only 2 weeks ago, JP Morgan paid a $2.6 Billion dollar fine for laundering Bernie Madoff’s $74 Billion in US dollars. No one went to jail from JP Morgan.
Perhaps Charlies biggest offense will be in not being “too big to jail”.
Time will tell, and in the meantime, the honey-badger of money will rock on!