The CEO of a bitcoin exchange and a bitcoin exchanger were arrested last week for their alleged involvement in the black market Internet site Silk Road, the Manhattan U.S. Attorney announced this week.
Charlie Shrem, 24, who ran BitInstant from 2011 to 2013, is charged with running a scheme that provided over $1 million in bitcoins to users of Silk Road, which the feds shut down in October. Shrem was arrested at JFK Airport in New York on Sunday. Robert M. Faiella, 52, an underground Bitcoin exchanger who went by BTCKing, is accused of running an underground bitcoin exchange on Silk Road from Dec. 2011 to Oct. 2013, selling bitcoins to those looking to buy drugs on the site anonymously. Faiella was arrested at his home in Cape Coral, Florida on Monday as per PC Magazine.
“Bitcoin is in the process of getting institutionalized,” said Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles. “Early on it was exploited by bad guys because it was still very raw and accessible,” he said. “As more investors and businesses get involved, it’s going to get harder and harder to use it for illicit purposes.”
Silk Road is an online black market. It is operated as a Tor hidden service, such that online users are able to browse it anonymously and securely without potential traffic monitoring. The website launched in February 2011; development had begun six months prior. Silk Road is an underground website, sometimes called the “Amazon.com of illegal drugs” or the “eBay for drugs”.
Online black market sites are feeling extremely vulnerable because the closure of the two main competitors Black Market Reloaded and Sheep Marketplace by authorities. The new upgrades to Silk Road have been based around making the site more secure and trying to safeguard against closure by the authorities. Apparently Dread Pirate Roberts has set up a fail over system by uploading portions of the site to hundreds of servers around the world so if one goes down or is seized by the authorities then it can go straight back within minutes as if it never went down at all. It is almost like having splinter cells set up everywhere so even if they think they took one down then another is straight back up and in its place.
The outcome of a good security measure is compliance, safe and secured network. When you are obsessed with extreme security and privacy, the outcome may lead to illegal activities. The Bitcoin came into existance for a good cause. It was designed and licensed at MIT, Boston to overcome limitation of centralized currency. It started as a currency protocol and regulators are hoping that it would used only for legal activities.
Read more about information security here: www.hp.com/go/arcsigh