The Internal Revenue Service might not be sure how to treat bitcoins, but the Justice Department, for now, is continuing to treat the cryptocurrency like old-fashioned greenbacks.
Authorities announced Monday the arrest of two operators of bitcoin exchanges on charges of laundering more than $1 million for the purposes of drug trafficking on the now-defunct underground drug site Silk Road.
Agents arrested Charlie Shrem, CEO of New York-based BitInstant, which is now offline, and Robert Faiella, better known by his online nom de plume “BTCKing.” Schrem was nabbed Sunday by authorities at the John F. Kennedy International Airport in New York. Faiella was arrested Monday at his home in Cape Coral, Fla.
Shrem and Failla are alleged to have “schemed to sell over $1 million in bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road,” according to Justice’s statement. The two are alleged to have funneled money to Silk Road users who would in turn use that money to anonymously purchase drugs and other illicit goods.
“Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act,” Manhattan U.S. Attorney Preet Bharara of the Southern District of New York said. “We will aggressively pursue those who would co-opt new forms of currency for illicit purposes.”
Last week, Bharara announced the forfeiture of $28 million worth of bitcoins that were seized from Silk Road.
James Hunt, a special agent with the Drug Enforcement Agency, added: “Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way.”
Faiella is charged with having operated an underground bitcoin exchange from late 2011 to late 2013 via the now infamous Silk Road, described by authorities as “a sprawling and anonymous black-market bazaar where illegal drugs of virtually every variety were bought and sold regularly by the site’s users.”
The charges are part of an ongoing string of busts against alleged suspected exchangers who surreptitiously navigated Silk Road from its launch in February 2011 until it was shut down by the FBI in October 2013. Silk Road copycats have emerged in the ashes of the fallen site, which was believed to have traded upward of $1 million dollars a month.
Cameron and Tyler Winklevoss, whose previous legal spars with Facebook founder Mark Zuckerberg were famously chronicled in the The Social Network, were among BitInstant’s original investors. The twins raised $1.5 million in seed funding for the start-up.
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Foreign Policy takes a look at the future of mining the estimated "100,000 near-Earth objects—including asteroids and comets—in the neighborhood of our planet. Some of these NEOs, as they’re called, are small. Others are substantial and potentially packed full of water and various important minerals, such as nickel, cobalt, and iron. One day, advocates believe, those objects will be tapped by variations on the equipment used in the coal mines of Kentucky or in the diamond mines of Africa. And for immense gain: According to industry experts, the contents of a single asteroid could be worth trillions of dollars." But the technology to get us there is only the first step. Experts say "a multinational body might emerge" to manage rights to NEOs, as well as a body of law, including an international court.
Not to be outdone by Jeffrey Goldberg's recent piece in The Atlantic about President Obama's foreign policy, the New York Times Magazine checks in with a longread on the president's economic legacy. In it, Obama is cognizant that the economic reality--73 straight months of growth--isn't matched by public perceptions. Some of that, he says, is due to a constant drumbeat from the right that "that denies any progress." But he also accepts some blame himself. “I mean, the truth of the matter is that if we had been able to more effectively communicate all the steps we had taken to the swing voter,” he said, “then we might have maintained a majority in the House or the Senate.”
Ronald Reagan's children and political allies took to the media and Twitter this week to chide funnyman Will Ferrell for his plans to play a dementia-addled Reagan in his second term in a new comedy entitled Reagan. In an open letter, Reagan's daughter Patti Davis tells Ferrell, who's also a producer on the movie, “Perhaps for your comedy you would like to visit some dementia facilities. I have—I didn’t find anything comedic there, and my hope would be that if you’re a decent human being, you wouldn’t either.” Michael Reagan, the president's son, tweeted, "What an Outrag....Alzheimers is not joke...It kills..You should be ashamed all of you." And former Rep. Joe Walsh called it an example of "Hollywood taking a shot at conservatives again."
In a sign that she’s ready to put a longer-than-expected primary battle behind her, former Secretary of State Hillary Clinton (D) is no longer going on the air in upcoming primary states. “Team Clinton hasn’t spent a single cent in … California, Indiana, Kentucky, Oregon and West Virginia, while” Sen. Bernie Sanders’ (I-VT) “campaign has spent a little more than $1 million in those same states.” Meanwhile, Sen. Jeff Merkley (D-OR), Sanders’ "lone backer in the Senate, said the candidate should end his presidential campaign if he’s losing to Hillary Clinton after the primary season concludes in June, breaking sharply with the candidate who is vowing to take his insurgent bid to the party convention in Philadelphia.”
The team behind the bestselling "Clinton Cash"—author Peter Schweizer and Breitbart's Stephen Bannon—is turning the book into a movie that will have its U.S. premiere just before the Democratic National Convention this summer. The film will get its global debut "next month in Cannes, France, during the Cannes Film Festival. (The movie is not a part of the festival, but will be shown at a screening arranged for distributors)." Bloomberg has a trailer up, pointing out that it's "less Ken Burns than Jerry Bruckheimer, featuring blood-drenched money, radical madrassas, and ominous footage of the Clintons."