The US government case against Charlie Shrem is full of legal contradictions.
1) Fincen did not issue guidance for bitcoin exchangers until March 18th 2013. http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html
Charlie Shrem cannot be held responsible for any violations of vague or none existent rules before March 18th 2013. This is protected by the US constitution. Article 1, Section 9, Clause 3.
No definition of bitcoin as a currency or financial instrument existed under US legal code. Only vague guidance valid March 18th 2013. US AML and KYC laws were enacted when something like bitcoin did not exist. No updates to the law have been passed by congress.
Bit instant was working hard to become compliant with the new guidance as everyone remembers by their login and ID system.
2) Charlie Shrem was NOT engaged in money laundering.
Money laundering is the attempt to conceal an illegal source of funds. Charlie Shrem was not accepting funds from SR dealers and hiding their source and issueing them clean money. He was selling bitcoin. Where those bitcoin were sent or spent was totally independent and out of Shrem's control.
The HSBC precedent.
The HSBC case was the complete opposite. HSBC was actively working to conceal hundreds of billions of dollars worth of drug profits. CONCEAL THEIR SOURCE Nobody from HSBC was arrested or charged. HSBC paid a fine equivalent to 1/3rd of a percent of the funds and continues operating inside the United States.
3) Dubious Claims
The US government essentially guessed Charlie's processing at 1million over 10months+ How did they arrive at this figure? How did they know all of the bitcoins were being spent on drugs?
4) Evidence gathering against Charlie.
This brings up a few questions. How did the government access the email's? Was a warrant issued? Were other government agencies involved?
The Shrem case is a clear cut witch hunt made to scare and intimidate the crypto currency space. Its blatantly obvious at the double standards applied vs the HSBC case. The difference is one guy with 0 connections vs a major international bank(with debt contracts to US banks).
US government agencies are now interpreting none-existent laws or applying laws ex post facto.