This Sunday, BitInstant CEO Charlie Shrem was arrested at JFK airport for money laundering. Allegedly, he has sold $1M worth of bitcoin, which has later been used to buy illegal drugs. But that’s not what money laundering is. Not at all. This can only be described as a harassment arrest.

It becomes increasingly clear that the arrest of BitInstant CEO Charlie Shrem is a harassment arrest, intended to spread chilling effects, an arrest that has no judicial basis whatsoever but to demonstrate wielding of power by a repressive police system.

Business Insider writes;

“Charlie Shrem has been arrested at JFK airport and charged with money laundering. …accused of selling over $1 million in bitcoins to Silk Road users, who would then use them to buy drugs and other illicit items.”

So what?

That’s not money laundering. That’s the exact opposite of money laundering. Money laundering is a well-defined concept; it’s when you take money that has been achieved through illegal means and give them a legitimate source, concealing the past of that particular piece of wealth.

What allegedly happened here was that Shrem sold one million USD worth of bitcoin to one or more individuals, and these means were later used in turn to purchase contraband from Silk Road, obviously without Shrem having any say about it. That’s neither criminal nor money laundering – when you sell an asset, whether a car, a house, or bitcoin, you’re not liable in the slightest if that asset is later exchanged for contraband by its new rightful owner. Nor are you in any way, shape or form required to act even if you know it’s been later exchanged for contraband by its new owner, and in particular, you’re not guilty of money laundering.

Money laundering is specifically when you take actions to turn black money into white, and not when you sell white money to somebody else and they turn it black without your consent. There’s so much wrong with this bullshit arrest on every conceivable level.

This is a harassment arrest apparently intended to intimidate and associate “bitcoin”, “silk road”, “drugs”, and “money laundering” with each other, and the community should take exactly none of this nonsense and this repression. At this point, it’s important to stand up for the bitcoin community and for Shrem against a harassment arrest.

Unfortunately, the plea bargain system of the United States may cause Shrem to confess to the crime just to not risk 25 years of jail. A system where you get the choice of 15 days in jail and guilty confession, scoring career points for the prosecutor, or risk 25 years but take your chances of an acquittal, is a system that has absolutely nothing to do with justice nor with law enforcement. There is supposed to be a conceptual difference between being charged with a felony and playing “Take the money, or open the box?”.

Note that I write “police system”, not “justice system”. The police system of the United States, from a due process perspective, is just barely qualified to issue parking tickets. And yet, it issues the death penalty. That causes hairs to rise on my arms.