"We believe he is at least one step more removed from the heartland of illegal conduct, which is really Silk Road," the lawyer said.

The two pleaded guilty as part of a deal struck with prosecutors from the office of Manhattan US Attorney Preet Bharara. They had been scheduled to go on trial on Sept. 22.

US authorities shut down Silk Road last year, though a new version bearing the same name was launched soon thereafter. The man accused of creating and operating Silk Road using the alias "Dread Pirate Roberts," Ross William Ulbricht, is facing separate charges and is scheduled for trial in November.

Mr Shrem stepped down from his post as vice chairman of the Bitcoin Foundation, a trade group, soon after his arrest in January. He was previously the chief executive of BitInstant, a Bitcoin exchange company.

Prosecutors said Mr Faiella, 54, operated an underground Bitcoin exchange on Silk Road under the name "BTCKing," providing currency for users engaged in illicit drug trafficking.

Mr Shrem processed transactions for Mr Faiella through BitInstant despite knowing the Bitcoin would eventually find their way to Silk Road, where the funds would be used for drugs, he said in court.

Both men agreed to forfeit $950,000 to the government as part of their plea deals.

"Robert Faiella and Charlie Shrem opted to travel down a crooked path running an illegal money transmitting business that catered to criminals bent on trafficking narcotics on the dark web drug site, Silk Road," Bharara said in a statement.

Edited by Steve Wilson

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Bitcoin promoter pleads guilty over Silk Road charges