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 Bitcoin Leader Going to Federal Prison 

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Michael Santos

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A federal judge sentenced Charlie Shrem, the CEO of a Bitcoin exchange company, to two years in prison on December 19, 2014. Prior to pleading guilty to the crime of “operating an unlicensed money transmitting business,” Mr. Shrem’s career was on a fast track to success. He was the former Vice Chairman of the Bitcoin Foundation and he played a leadership role in transitioning Bitcoin into an acceptable form of payment. Unfortunately, Mr. Shrem became involved with a group of people who were complicit in the notorious Silk Road marketplace.

Silk Road, founded in February 2011, provided a place for buyers and sellers of illicit contraband to meet. They engaged in all types of transactions and used bitcoins as a payment form. Authorities charged Mr. Shrem with playing a role in converting the bitcoins into US Currency. His guilty plea resulted in the two-year sentence. That is a victory. Prosecutors could have brought all types of serious charges against Mr. Shrem, including conspiracy charges for drug trafficking and money laundering. Such charges would have exposed Mr. Shrem to a much lengthier prison term and in much more difficult conditions.

Although I haven’t met Mr. Shrem, experience convinces me that he rightfully perceives himself as visionary entrepreneur. Unfortunately, government prosecutors see him as a criminal. Now that he has admitted guilt and a judge sentenced him to prison, the Bureau of Prisons will also see him as a criminal.

Mr. Shrem was fortunate to have secured representation from a great defense attorney, Marc Agnifilo. Mr. Agnifilo’s LinkedIn profile reveal him as a “Senior Trial Counsel” at the high-powered law firm, Brafman and Associates in New York City. Prior to that role, Mr. Agnifilo served as “Chief of the Violent Crimes Unit” for the U.S. Attorney’s Office in New York.

Whereas Mr. Shrem likely wanted to fight the charges initially, I suspect that his lawyer gave him sage counsel. Rather than fighting the charges, the lawyer likely explained to the young man that he could position himself for a rebound. The best way of doing that would be to accept responsibility and plead guilty to reduced charges. Then, the lawyer would work with Mr. Shrem to prepare an effective sentence-mitigation package that would help Mr. Agnifilo negotiate a favorable sentence.

What is next for Mr. Shrem?

Now that a judge has sentenced Mr. Shrem to two years, federal Marshals will forward the judge’s sentencing order to the Bureau of Prisons. Administrators in Grand Prairie, Texas will determine where he should serve his sentence and designate an institution.

Mr. Shrem would serve himself well to educate himself about the challenges that he will face in federal prison. To the extent that he understands how to overcome those challenges, he will emerge from imprisonment ready to resume what promises to be a stellar career.

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