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Accused fraudster Charles Shrem quits Bitcoin Foundation board

'Prolonged legal dispute' just wouldn't look good

Charlie Shrem, the 24-year-old Bitcoin entrepreneur who was arrested on Monday on money-laundering charges, has resigned from his position as vice chairman of the board of the Bitcoin Foundation.

Authorities scooped up Shrem at New York City's JFK Airport on claims that he and accomplice Robert Faiella were involved in processing some $1m (£600,000) of Bitcoin payments for the online drugs marketplace Silk Road.

Shrem is further accused of failing to report the payments as suspicious activity, as was his duty under the Bank Secrecy Act as compliance officer for Bitcoin startup BitInstant, which he founded.

In a statement issued on Tuesday, the Bitcoin Foundation said Shrem and the other board members had mutually agreed that he would step down from his role, effective immediately.

"While Charlie has contributed a great deal of personal effort and resources to enhance the adoption of Bitcoin worldwide, a prolonged legal dispute would inevitably detract from advancing that core mission," said Jon Matonis, the board's executive director.

The incident is only the latest setback for the Bitcoin Foundation, which was launched in 2012 with the aim of cleaning up Bitcoin's "undeserved reputation stirred by ignorance and inaccurate reporting."

The Foundation's activities have seemingly done little to stem the tide of negative press from the oft-murky Bitcoin economy, however, with the closure of Silk Road and the subsequent seizure by authorities of $28m worth of Bitcoins being perhaps the most publicized example.

In its statement, the Foundation said it was "both surprised and saddened" to learn of the charges against Shrem, but added that they do not represent an indictment of Bitcoin or its community.

"The foundation does not condone illegal activities and values transparency, accountability and a high level of responsibility towards its members and overall community," the statement said. ®

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