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Bitcoin Millionaire Charlie Shrem Under House Arrest Following Federal Indictment The bad-boy founder of the Bitcoin Foundation and BitInstant is back at his mom and dad's place and he's in big trouble for allegedly funneling $1 million into shady Silk Road dealings.

By Kim Lachance Shandrow

Opinions expressed by Entrepreneur contributors are their own.

Scruffy-faced New York City Bitcoin playboy Charlie Shrem is in some seriously hot water and deep, too. Perhaps as deep as the known partier might have been into Silk Road, where he allegedly scored drugs and poured money into the underground drug trade.

The outspoken 24-year-old former vice chairman of the Bitcoin Foundation and former CEO of the popular BitInstant exchange, a Bitcoin-rich millionaire who dubbed himself "Charlie Van Bitcoin," is currently under house arrest at his parents' Brooklyn residence. A prodigal millennial back at home with his parents. Very original.

News of Shrem's new domestic "situation" follows the flashy Bitcoin evangelist's indictment over his alleged role in laundering some $1 million on the "Amazon of the black markets," the anonymous ecommerce site Silk Road. The Feds shook down and shut down the "online drug bazaar" last October. Last month, authorities announced the grand jury indictment of Ross Ulbricht, a.k.a. "Dread Pirate," the alleged mastermind of the shady marketplace.

Related: BitInstant CEO Arrested for Alleged Ties to Silk Road

Shrem himself reportedly trolled Silk Road to buy drugs, likely weed, for himself. He was formally indicted April 10 following a failed bid to reach a plea bargain agreement.

The U.S. Department of Justice arrested him on Jan. 27 at JFK Airport on money laundering charges related to accusations that he sold more than $1 million worth of BTC to Silk Road sharks to use to score drugs and other illegal goods. Also on Jan. 27, the Feds also arrested Florida restaurant owner Robert Faiella, Shrem's alleged co-conspirator, the self-crowned "BTCKing."

According to the Justice Department's criminal complaint, the charges filed against Shrem and Faiella include "conspiring to commit money laundering, and operating an unlicensed money transmitting business." Additionally, Shrem is charged with "willfully failing to file any suspicious activity report regarding Faiella's illegal transactions through the Company, in violation of the Bank Secrecy Act."

Shrem is scheduled to be arraigned in two weeks in front U.S. District Judge Jed Rakoff. His lawyer, Marc Agnifilo, has said that his client intends to plead not guilty. If convicted, the Bitcion baron and media darling could serve a 20-year prison sentence.

Related: Alleged Founder of Silk Road Pleads Not Guilty, Will Stand Trial in November

BitInstant, which Shrem founded while still an undergrad in 2011 and the Winklevoss twins backed with $1.5 million in seed money, went dark the day of Shrem's initial arrest. The company is at the epicenter of a class-action suit filed on behalf of customers. They claim that the BitInstant falsely represented its services and failed to properly carry them out.

Shrem was an early Bitcoin adopter and champion, reportedly buying 500 BTC during his senior year at Brooklyn College, back when they were still a bargain at around $3 or $4 each. When the price rose to $20 he purchased "thousands more." At press time, the Bitcoin price neared $500 at $492.99, according to the CoinDesk Price Index.

The controversial and widely misunderstood cryptocurrency has bumped along a rocky road in the wake of the fall of Mt. Gox, only compounded by rumors that the People's Bank of China (PBOC), China's central bank, was considering imposing limits on Bitcoin transactions. The price shot up by approximately 10 percent after PBOC governor Zhou Xiaochuan's recent reassurance that the bank won't ban Bitcoin.

Related: Cameron Winklevoss: A 'Sheriff' for Bitcoin's Wild West Is a Good Thing

Kim Lachance Shandrow

Senior Writer. Frequently covers cryptocurrency, future tech, social media, startups, gadgets and apps.

Kim Lachance Shandrow is a senior writer at 

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