The vice-chairman of the Bitcoin Foundation, a trade group promoting the adoption of the digital currency, has been charged by US prosecutors with conspiring to commit money laundering by helping to transfer cash to online drugs bazaar Silk Road. Charlie Shrem, who had financial backing from entrepreneurs the Winklevoss twins and is known as one of bitcoin's biggest global promoters, was arrested on Sunday at John F. Kennedy International Airport in New York, the US Attorney's Office in Manhattan said. Shrem, who was also charged with operating an unlicensed money-transmitting business, appeared in US District Court in Manhattan on Monday and was released on US$1 million bond. "At this point the allegations in the complaint are simply allegations, and Mr Shrem is presumed innocent," his lawyer Keith Miller said. The 24-year-old entrepreneur, who lives above a bar he jointly owns in Manhattan that accepts bitcoins as payment, was CEO of BitInstant, a bitcoin exchange company that closed last summer. According to prosecutors, Shrem conspired with a Florida resident, Robert Faiella, who ran an illegal exchange, to sell more than US$1 million in bitcoins to users of Silk Road, which was shut down by US authorities last year. Faiella, 52, is also charged in the complaint filed in US District Court in Manhattan with conspiring to commit money laundering and operating an unlicensed money-transmitting business. He was arrested at his home in Coral Gables, Florida. At his court hearing on Monday in federal court in Florida, Faiella consented to detention until today, when there will be a bail hearing. Bitcoin is a digital currency that is not backed by a government or central bank. Its value fluctuates according to demand by users. Users can transfer bitcoins to each other over the internet and store the currency in digital "wallets". The criminal complaint says that Shrem, in addition to knowing that Faiella's business was transferring money to Silk Road, also used Silk Road himself to buy drugs, including marijuana-infused brownies. "When bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act," Preet Bharara, the US attorney for Manhattan, said in a statement on Monday. "We will aggressively pursue those who would co-opt new forms of currency for illicit purposes." Bharara has said that prosecutors were not going after bitcoin itself and viewed it as they view any other currency in which transactions are sometimes made illegally. The charging of a prominent Bitcoin Foundation official may be a blow to bitcoin's prospects, though it did not have a major impact on trading. Bitcoins were exchanging hands at US$970 yesterday, down from more than US$1,000 earlier this month. Winklevoss Capital, which is run by twin brothers Cameron and Tyler Winklevoss, invested in BitInstant in 2012 and led a capital-raising effort last May that raised US$1.5 million. The twins, who are best known for their lawsuit against Facebook founder Mark Zuckerberg in which they said Zuckerberg had stolen their idea for an online social networking platform, have been seeking regulatory approval for a bitcoin exchange-traded fund. "When we invested in BitInstant in the fall of 2012, its management made a commitment to us that they would abide by all applicable laws, including money laundering laws, and we expected nothing less," the Winklevoss twins said in a statement. "We were passive investors in BitInstant and will do everything we can to help law enforcement officials," they added. As part of the conditions of his bail, Shrem will be confined to his parents' home in Brooklyn. A report prepared by the court for his bail hearing listed his net worth at US$6 million, according to judge Henry Pitman. Serrin Turner, an assistant US attorney, opposed bail, saying Shrem had a "strong incentive to flee". Bitcoin insiders said Shrem's arrest showed how hard it was to get away with illegal activity using bitcoin, which has an ownership chain built into its software. "Using bitcoin for illicit transactions is really, really dumb," said Patrick Murck, the Bitcoin Foundation's general counsel. "Bitcoins are so easy to track."