The operators of two exchanges for the virtual currency Bitcoin have been arrested in the US.
The Department of Justice said Robert Faiella, known as BTCKing, and Charlie Shrem from BitInstant.com have both been charged with money laundering.
The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.
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Mr Shrem is accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to anonymously buy drugs.
The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.
The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.For some quick background: bitcoins are a virtual currency that can be purchased or generated through solving programming puzzles. The currency can be used to purchase goods or services from those who accept bitcoin payments. More background on bitcoins is available here.
Proponents of bitcoins tend to argue that the currency is favorable because it is free from the constraints of traditional currency. But this case shows that, in some cases, bitcoin exchanges may be subjected to laws that regulate the transfer of traditional currency. It will be interesting to see if more cases like this follow, and if this has an impact on the popular appeal and value of bitcoins.