Charlie Shrem, the CEO of Bitcoin exchange company BitInstant and a well-known voice in the virtual currency community, has been charged with scheming to sell and launder $1 million worth of Bitcoin to users of the illegal drug website Silk Road.

The criminal complaint, unsealed today in Manhattan federal court, says that the 24-year-old Shrem conspired with Robert Faiella, a 52-year-old who used the handle "BTCKing." Faiella allegedly obtained Bitcoins from Shrem, then sold them anonymously to Silk Road users at a markup through the site.

The prosecutors say Shrem was aware of the illegal activity and even bought drugs on Silk Road himself. "Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act," US Attorney Preet Bharara said in a statement.

The charges carry a maximum sentence of up to 25 years in prison for Faiella and 30 years for Shrem

Faiella and Shrem are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison. In addition, Shrem is being charged with one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years in prison.