Federal agents have arrested Charlie Shrem, CEO of Bitcoin exchange BitInstant, for money laundering in connection with online drug exchange Silk Road.
The U.S. attorney's office said Shrem helped someone he hadn't met in person, Robert Faiella, sell more than $1 million worth of bitcoins to Silk Road customers.
Shrem was arrested at JFK Airport Sunday. Faiella, his 52-year-old partner, allegedly ran an underground Bitcoin exchange using the alias BTCKing.
He was arrested at his home in Cape Coral, Fla. Both are charged with conspiracy to launder money and operating an unlicensed money transmitting business.
Additionally, Shrem faces a charge for not tipping off the government.
Shrem, 24, is a major player in the Bitcoin world. The BitInstant exchange, based in New York City, lets people buy bitcoins locally at more than 700,000 locations.