Charlie Shrem, a prominent member of the Bitcoin community who was arrested for money laundering yesterday, has resigned his position as vice chairman of the virtual currency trade organization The Bitcoin Foundation.

Shrem is accused of supporting an illicit Bitcoin exchange for users of Silk Road, the underground marketplace best known for illegal drugs. Shrem's company, BitInstant, provided temporary credit in order to speed up transactions in the virtual currency, which can take up to a few days using other services. The criminal complaint, filed in a New York federal court, alleges that Shrem knowingly sold bitcoins to Robert Faiella, who then sold them at a markup on the Silk Road forums.

The Bitcoin Foundation, which has emerged as the premier authority on the five-year-old virtual currency, attempted to distance itself from Shrem while emphasizing that he has not been proven guilty yet.

"It has been mutually decided that Charlie Shrem resign from the Board of Directors, effective immediately."

"As a foundation, we need to remain focused on our core mission to standardize, protect, and promote the Bitcoin core protocol," director Jon Matonis said in a statement. "While Charlie has contributed a great deal of personal effort and resources to enhance the adoption of Bitcoin worldwide, a prolonged legal dispute would inevitably detract from advancing that core mission. Therefore, in order to focus on his pending trial, it has been mutually decided that Charlie Shrem resign from the Board of Directors, effective immediately. The Board accepted that resignation today."

Shrem was a frequent public speaker on the subject of Bitcoin, coordinated a Manhattan meetup of Bitcoin enthusiasts, and owns a bar in Midtown Manhattan that accepts the virtual currency. He and Faiella are being charged with one count of conspiracy to commit money laundering, which carries a prison sentence of up to 20 years, and one count of operating an unlicensed money transmitting business, which carries a prison sentence of up to five years. Shrem is also being charged with one count of willful failure to file a suspicious activity report, which carries an additional five years.