In January of this year, Charlie Shrem, CEO of Bitcoin exchange service BitInstant, was arrested over allegations of money laundering. Reports stated that Shrem and a man named Robert Faiella, also known as BTCKing, planned to sell more than $1 million worth of Bitcoins to users of the infamous digital black market Silk Road.

Shrem is now facing a two-year prison sentence for aiding Silk Road users to exchange cash for Bitcoin after pleading guilty back in September.

According to a report in Ars Technica, the two men earned substantial profits from this scheme. Faiella advertised on Silk Road, under the guise of BTCKing, that he offers the fastest way to get your Bitcoins anonymously. Faiella would instruct interested Bitcoin buyers to deposit money to a third-party bank account, which is not always the same. He then exchanged that money for Bitcoin using BitInstant, before delivering the Bitcoins to buyers. It sounds pretty innocent, but Faiella and Shrem took a significant cut from payments as a transaction fee.

According to an undercover law enforcement officer, when $500.11 was deposited to a third-party bank account as instructed, $444 worth of Bitcoins was received the same day. The same undercover agent bought another set of Bitcoins, depositing $507.10 to a different third-party bank account and received the same amount of $444 on the same day. This means that people could be paying $600 or more and still get $444 worth of Bitcoins in return as the cost of transactions was not clearly specified.

When Shrem pled guilty back in September, his lawyers tried to argue that his actions were brought about by his young age as he was only 22 when he started his Bitcoin scheme, but presiding US District Judge Jed Rakoff didn’t buy his argument. The judge believed that Shrem “was knowingly, willfully, to some extent excitedly and even passionately involved in activities he knew were, in part, involved in serious violations of the law.”

Shrem needs to surrender himself to the authorities in 90 days to serve his two-year prison sentence. Despite not getting his case dismissed, Shrem is staying positive and seemed to have accepted his sentence based on his tweet last week.

I’ve been sentenced to 2 years, to self surrender in 90 days. Considering I was facing 30 years, justice has been served. #Bitcoin

— Charlie Shrem (@CharlieShrem) December 19, 2014

Image credit: Wikipedia