Charlie Shrem, CEO of the BitInstant bitcoin exchange, and another man have been charged with allegedly laundering money for individuals who illegally bought drugs online.

Pretty Bharara, U.S. attorney for the Southern District of New York, alleged Monday that Shrem and underground bitcoin exchanger Robert Faiella ("a.k.a. BTCKing") were part of "a scheme to sell over $1 million in Bitcoins to users of 'Silk Road,' the underground website that enabled its users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement."

According to a Justice Department statement, "each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business."

Shrem was arrested Sunday at John F. Kennedy International Airport in New York, "and is expected to be presented in Manhattan federal court later today before U.S. Magistrate Judge Henry Pitman," Justice says. "Faiella was arrested today at his residence in Cape Coral, Fla., and is expected to be presented in federal court in the Middle District of Florida."

BitInstant, as Business Insider says, is currently offline.

Time magazine writes that:

"The complaint alleges that Faiella took orders from Silk Road users hoping to purchase Bitcoin, the anonymous peer-to-peer crypto-currency. Shrem then filled the orders by transferring funds into an account controlled by Faiella and hosted on a third-party Japan-based Bitcoin exchange. Together the two allegedly sold over $1 million in Bitcoin to Silk Road users, who then used those Bitcoins to attempt to purchase anonymously drugs and other illegal goods from the deep web black market."

The criminal complaint against the men is here.

NPR's Jacob Goldstein and David Kestenbaum have previously answered the question "What Is Bitcoin?" on the Planet Money blog. They explained it, in part, this way:

"Bitcoin is a lot like cash — for the online universe. It doesn't actually exist in the physical world. You can't hold bitcoins in your hand; they exist only on computers. There is no center to the whole bitcoin system. It's not like there's one computer somewhere storing all the information. It's a peer-to-peer system, run by the people who use it.

"To truly understand bitcoin, you need to use it. We started by visiting where you can trade actual dollars for the virtual currency."

David has also posted on one bitcoin insider's thoughts about "crime, Congress and Satoshi Nakamoto."

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