US authorities have filed criminal charges against two operators of a Bitcoin exchange that enabled its users to buy drugs and other illicit goods on the Silk Road underground website.
Federal prosecutors said they unsealed a criminal complaint against Robert Faiella and Charlie Shrem, who ran a company allowing people to use cash to buy Bitcoins, a virtual currency that is based on a mysterious computer algorithm.
The two are charged with conspiracy to commit money laundering and running an unlicensed money transmitting business, according to the US Attorney's office in New York.
Mr Shrem, 24, also charged with violating the Bank Secrecy Act by failing to file any suspicious activity reports, was arrested Sunday at JFK International Airport in New York.
Mr Faiella, 52, was arrested at his home Monday in Cape Coral, Florida.
"As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road," said US Attorney Preet Bharara said in a statement.
"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. We will aggressively pursue those who would co-opt new forms of currency for illicit purposes."
The new charges come more than three months after federal officials seized the Silk Road website used for drugs, hacker tools and other illegal goods and arrested its alleged mastermind, Ross William Ulbricht, who was said to be "Dread Pirate Roberts".
Mr Ulbricht, who is awaiting trial in New York, has denied the charges and also claims he is not "Dread Pirate Roberts".
In November, a message appeared on the social media site Reddit claiming Silk Road had reopened weeks after it was shut down by the FBI.
Bitcoin was invented in the wake of the global financial crisis by a mysterious computer guru using the pseudonym Satoshi Nakamotoby.
While Bitcoins have gained in legitimate transactions, the unregulated currency has also been linked to various kinds of criminal activity.