Another major Bitcoin-related bust went down last night when US law enforcement officials arrested the operator of exchange website BitInstant.com, alongside a second individual, charging them with money laundering tied to the sale of illegal drugs, the Washington Post reported last night.

Charlie Shrem, CEO, and Robert Faiella, were apparently arrested for planning the sale of more than $1 million worth of Bitcoin to users of the Silk Road, a former online ‘black market’ that was used to facilitate illegal transactions involving drugs and guns. According to a statement put out by the US Attorney’s Office for the Southern District of New York, the pair “knowingly contributed to facilitating the drug sales on Silk Road, earning substantial profits along the way.”

No mention was made of BitInstant in the indictment against the pair, but the website went offline shortly after Shrem was arrested. The news will nevertheless cause friction as Shem was a major player in the Bitcoin community. BitInstant exchange, which was based in New York City, was one of the largest exchanges in the world, allowing people to buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. The company 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 in an emailed statement to BusinessInsider that they’re “deeply concerned” about Shrem’s arrest.

“When we invested in BitInstant in the fall of 2012, its management made a commitment to us that they would abide by all applicable laws – including money laundering laws – and we expected nothing less. Although BitInstant is not named in today’s indictment of Charlie Shrem, we are obviously deeply concerned about his arrest. We were passive investors in BitInstant and will do everything we can to help law enforcement officials. We fully support any and all governmental efforts to ensure that money laundering requirements are enforced, and look forward to clearer regulation being implemented on the purchase and sale of bitcoins.”

The criminal complaint alleges that Shrem changed cash into bitcoins for Faiella, who ran an underground bitcoin exchange through the username BTCKing, on Silk Road’s website. The criminal complaint says that Shrem, in addition to knowing that Faiella’s business was funneling money into Silk Road, also used Silk Road himself to buy drugs, including marijuana-infused brownies.

The IRS claims the partners exchanged $1.05 million in bitcoins over a 10-month period ending in October 2012.

Shrem and Faiella’s arrest is just the latest twist in the story of the Silk Road, which was taken offline back in October 2013 when it’s alleged operator Ross Ulbricht, AKA “Dread Pirate Roberts,” was himself arrested. Federal agents managed to find the website’s server, which stored a wealth of transaction data and private messages between users. It’s believed that some of that information was used as the basis for Shrem’s and Faiella’s arrest.