Bitcoin Boss Pleads Guilty In Silk Road Case

Two men, including the boss of a New York-based Bitcoin firm, have admitted enabling the digital currency to be funnelled to the black market website Silk Road.

Charlie Shrem - who was chief executive of BitInstant and also a former vice president of the Bitcoin Foundation - pleaded guilty in federal court to aiding and abetting the operation of an unlicensed money transmitting business.

Robert Faiella admitted operating an unlicensed money transfer business.

Both men face up to five years in jail.

The case grew from the US government's shutdown in October 2013 of Silk Road - a 'dark' site where users could anonymously buy and sell contraband and drugs using Bitcoin - which is unregulated and therefore difficult to track but volatile in terms of value.

The men were accused of letting more than $1m (£600,000) in Bitcoins reach the website and both admitted knowing that narcotics were bought and sold there.

Prosecutors said Faiella, from Florida, ran an underground Bitcoin exchange on the Silk Road website, operating under the username "BTCKing", and he filled his orders through Shrem's company from August 2011 until July 2013.

Silk Road used a privacy-protecting Tor network to shield the identities of buyers and sellers around the world - with its 13,000 listings including categories such as "cannabis", ''psychedelics" and "stimulants".

As they busted the site, authorities seized approximately $3.6m (£2.2m) worth of Bitcoins - the largest-ever seizure of the currency - bitcoins that were later auctioned off to a single bidder.

It was alleged that Shrem never once filed a notice of concern relating to Faiella's transactions.

Sentencing of both men was due to take place in January.