updated 1/27/2014 11:31:54 AM ET 2014-01-27T16:31:54

NEW YORK (Reuters) - U.S. prosecutors on Monday announced charges against two men operating Bitcoin exchange businesses for attempting to sell $1 million in the digital currency to users of the underground black market website Silk Road, which was shut down by authorities in September.

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The U.S. Attorney's office in Manhattan said in a statement that authorities arrested Charlie Shrem, chief executive officer of the exchange BitInstant.com, on Sunday and Robert Faiella, who ran an underground Bitcoin exchange called BTCKing, on Monday. The two were charged with conspiring to commit money laundering and operating an unlicensed money transmitting business.

Shrem is also vice president of the main Bitcoin-focused trade group, the Bitcoin Foundation, according to the foundation's website and Shrem's LinkedIn profile.

(This story was corrected to fix spelling of name to Shrem, not Schrem, in paragraphs 2 and 3)

(Reporting by Emily Flitter; Editing by Leslie Adler)

(c) Copyright Thomson Reuters 2014. Check for restrictions at: http://about.reuters.com/fulllegal.asp

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