Bitcoin promoter will plead guilty to selling $1 million in digital currency to 'Silk Road' users

By Nate Raymond

NEW YORK (Reuters) - Bitcoin entrepreneur Charlie Shrem has reached a plea deal to resolve U.S. charges that he engaged in a scheme to sell over $1 million of the digital currency to users of illicit online marketplace Silk Road, his lawyer said Friday.

Shrem, the former vice chairman of the Bitcoin Foundation, will plead guilty next Thursday in New York federal court to unlicensed money transmission, Marc Agnifilo, his lawyer told Reuters in an email.

Prosecutors had previously charged Shrem with operating an unlicensed money transmitting business, money laundering conspiracy and failing to file suspicious activity reports with government banking authorities.

Federal authorities shut down Silk Road last year, though a new Internet marketplace under the same name was launched in November. Prosecutors contend Silk Road enabled users to buy and sell illegal drugs and other illicit goods and services.

Soon after his arrest in January, Shrem stepped down from his role at the Bitcoin Foundation, a well-known trade group. He was previously CEO of BitInstant, a bitcoin exchange company.

A notice of a plea hearing in the case of Shrem and his co-defendant, Robert Faiella, was included in a calendar distributed by court officials earlier Friday.

It was not immediately clear if Faiella, a Florida man who faced similar charges as Shrem, will plead guilty or move ahead with trial Sept. 22. He has previously pleaded not guilty.

But Faiella, 54, is expected to fly to New York for the hearing, according to a court order filed Friday.

A lawyer for Faiella did not respond to requests for comment. A spokesman for Manhattan U.S. Attorney Preet Bharara declined comment.

Prosecutors are pursuing a separate case against Ross William Ulbricht, the man accused of creating and operating Silk Road under the name "Dread Pirate Roberts." He is set to face trial Nov. 3.

The case is U.S. v. Faiella, U.S. District Court, Southern District of New York, No. 14-cr-00243.

[Image: Bitcoin Foundation Vice Chairman Charlie Shrem exits the Manhattan Federal Courthouse in New York on Jan. 27, 2014. By Lucas Jackson for Reuters]