Robert Faiella, whose online alias was “BTCKing,” who worked for Silk Road as an underground Bitcoin currency exchange agent, was sentenced today to four years in prison. This was announced by Preet Bharara; the United States Attorney for the Southern District of New York. The sentence was for his part in aiding and abetting the transmission of nearly $1 million in Bitcoins intended for drug trafficking on “Silk Road.” At his hearing in September of last year, Faiella did plead guilty before U.S. District Judge Rakoff, who issued this sentence to Faiella.
BTCKing was the main Bitcoin exchange for Silk Road
Over the course of law enforcement's investigation, Faiella ran an underground Bitcoin exchange on the Silk Road website from about December 2011 to October 2013. The Silk Road website served as an anonymous black market where illegal drugs were bought and regularly sold by the site’s users with Bitcoin. Under his online username “BTCKing,” Faiella sold Bitcoins to users to facilitate the purchase of illegal goods and services on the Silk Road website. In effect, he was the site's main money changer from fiat to digital currency. After getting BTC order from the site's users, he filled the orders through BitInstant in New York. The advantage, of using BitInstant, is there was no personal information required so that Bitcoins could be bought anonymously. All someone had to do was pay a fee for the service. Faiella would then sell the Bitcoins back at Silk Road, with a markup fee.
This ties in with the infamous figure Charlie Shrem, the Chief Executive Officer of BitInstant, who knowingly aided and abetted Faiella and his Silk Road endeavors. Through the assistance of Shrem, Faiella exchanged almost $1 million in cash for Bitcoins for the benefit of Silk Road users so that the users could make their illegal purchases on Silk Road. These practices took place from December of 2011 to October of 2013, when the website was shut down by the FBI.
Faiella, 55, received other penalties during sentencing, in addition to jail time. He was also sentenced to three years of supervised release and was fined a total of $950,000. This would represent the amount of funds involved in the monetary exchanges he was involved in at Silk Road.
Charlie Shrem, who was Faiella’s co-defendant, was sentenced on December 19, 2014 by Judge Rakoff to two years in prison for his part in the dealings.