US arrests BitInstant CEO -

The US government has fingered the collar of Charlie Shrem, the CEO of Bitcoin exchange BitInstant, charging him with laundering money for customers of the dark web Silk Road exchange.

The US attorney in the Southern District of New York said Shrem helped Robert Faiella, sell more than $1 million worth of bitcoins to Silk Road customers. Faiella, 52, allegedly ran an underground Bitcoin exchange using the alias BTCKing.

Coppers swooped on Shrem at John F. Kennedy International Airport in New York and cuffed Faiella at his home in Cape Coral, Florida prosecutors said. Both are charged with conspiracy to launder money and operating an unlicensed money transmitting business. Shrem faces a charge failing to fess up to the Feds that something was up.

Shrem, 24, is a major player in the Bitcoin world. His BitInstant exchange lets people buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. It received a $1.5 million investment last year from Cameron and Tyler Winklevoss. Shrem is also vice chairman of the Bitcoin Foundation, one of the currency's biggest advocates.

The Winklevoss twins said they were "deeply concerned" about Shrem's arrest as their investment was on the basis that BitInstant would abide by all applicable laws - including money laundering laws.