Winklevoss-Backed Bitcoin Startup CEO Busted by Feds

If there's anything the Winklevoss ubermenschen love more than Harvard and revenge, it's Bitcoin, everyone's favorite speculative funny money. They've been investing in Bitcoin-related startups, and it's already going south: one of their CEOs just got arrested at the airport.

Right now the brothers probably look cranky, as seen above in a still from The Social Network. Business Insider reports Charlie Shrem, CEO of Bitinstant, is in federal custody on money laundering charges. The Justice Department says his company Bitinstant, which allowed people to buy and sell Bitcoin, was turning a buck via Silk Road, the notorious online drug bazaar. When news of the Winks' investment first popped up, one of the brothers had nothing but glowing words for Shrem:

"Charlie has been in the space for a very long time, and he has an impeccable reputation among Bitcoiners. He knows everyone in the space and everyone in the space knows him."

A Justice Department press release says the following:

Manhattan U.S. Attorney Preet Bharara said: "As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road. Truly innovative business models don't need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes."

Shrem was also a personal fan of the Silk Road:

SHREM, who personally bought drugs on Silk Road, was fully aware that Silk Road was a drug-trafficking website.

Bitinstant—which the Winklevosses pumped $1.5 million into—is now offline.

h/t Dan Primack