Bitcoin Exchange Operator Tied to Silk Road Gets 4 Years

The operator of a Bitcoin exchange tied to the illicit online drug bazaar Silk Road was sentenced to four years in prison after pleading guilty to running an illegal money business.

Robert Faiella, a former plumber living in Florida, told U.S. District Judge Jed Rakoff today that he exchanged the digital currency under the name BTCKing for use in online drug deals to support his family after he became disabled by back troubles. He faced a maximum of five years.

At the time of the event, I saw no other way, Faiella said in his sentencing hearing in Manhattan federal court. It still doesnt mitigate that I broke the law.

Faiella was charged in April with Charlie Shrem, the ex-Bitcoin Foundation vice chairman. The case grew out of an investigation into the Silk Road site, where customers used bitcoins to buy drugs and other illegal items anonymously. Ross William Ulbricht, who says he was the founder of the site, is being tried on conspiracy and Internet drug trafficking charges.

Ulbrichts trial is in its fourth day in the same courthouse where Faiella was sentenced. Ulbricht, who denies the charges, claimed he started Silk Road as an economic experiment, then left the site a few months later when it became too stressful for him.

Ulbricht claims he was set up as a fall guy by Mark Karpeles, the former head of the bankrupt Mt. Gox Co. bitcoin exchange. Jared Der-Yeghiayan, a Department of Homeland Security special agent, testified in Ulbrichts trial that he believed in mid-2013 that Karpeles ran Silk Road. Investigators later determined Karpeles wasnt involved, he told jurors. Karpeles denied having anything to do with Silk Road.

U.S. District Judge Katherine Forrest, whos overseeing Ulbrichts trial, today limited the questions his lawyer can ask about the governments investigation of others they suspected of being the Silk Road operator who went by the name of Dread Pirate Roberts.

Ulbricht, who was arrested in a San Francisco library in October 2013, faces as long as life in prison if convicted.

The Faiella case is U.S. v. Faiella, 14-cr-00243, U.S. District Court, Southern District of New York (Manhattan). The Ulbricht case is U.S. v. Ulbricht, 14-cr-00068, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

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Bitcoin Exchange Operator Tied to Silk Road Gets 4 Years