Report: Charlie Shrem cutting plea deal in Silk Road case

Bloomberg reports that former BitInstant CEO Charlie Shrem is in the process of working out a plea deal with prosecutors for his alleged role in the Silk Road drug network. Shrem was arrested in January for conspiring to launder more than $1 million dollars in drug-related funds through his company.

Assistant U.S. Attorney Serrin Turner asked that Shrem’s case be postponed until April 28, saying discussions regarding a possible deal to end the case have taken place, according to a March 28 filing in Manhattan federal court.”

As the former vice chairman of the Bitcoin Foundation, Shrem is one of the highest-profile defendants on the case against Ross William Ulbricht, the man charged with being Silk Road mastermind “Dread Pirate Roberts.” Shrem has consistently denied any intentional involvement with the online drug bizarre, noting that BitInstant didn’t actually sell bitcoins, but rather served as a payment service to speed up deposits to exchanges. Speaking with CoinDesk in February, Shrem explained:

These customers would conduct the transactions themselves, then send the money to their own Mt. Gox accounts. Once on this site, they would buy bitcoins, transfer the bitcoin to their Silk Road account and buy illicit goods.

“Now how many times am I removed from that already?” he added.

The recent boost in legitimacy given to bitcoin investment thanks to clarified IRS rules and growing Wall Street interest may be playing a role in the plea agreement. Shrem has long argued that prosecutors did not understand how bitcoin transactions work, or the role that BitInstant played in the transaction process. With new regulatory guidelines treating bitcoin as a form of property, existing protections for investment bankers and stock traders could be applicable in Shrem’s case, making the government’s position much more difficult to prove.