I don't see why selling BTC in SilkRoad is illegal. How so? by association with other things that happen there? By that standard working for the government would make you a criminal.
If a licensed exchange even suspects illicit activity, it must report it. Using financial transactions such as these in order to obfuscate and conceal illegal activity is money laundering.
In this case, the guy whose job it was to report the activity as Chief Compliance Officer was materially involved in the illicit activity itself. According to the complaint, he was even a SR drug customer, so there's no way he can feign ignorance as to what was going on at SR.
You've seen poor reports, then; specifically, you haven't seen either the actual Justice department press release or the criminal complain, both of which have been both linked and excerpted in this thread.
> No other activity related to money laundering is being reported.
Actually, the money laundering activity being reported is the official of the exchange responsible for AML compliance advising a user who -- by that officials own description -- he had reason to suspect was engaging in criminal activity on how to structure transactions to avoid anti-money-laundering flagging, and that user actually so structuring transactions.
Selling bitcoins wasn't money laundering -- it was the basis of the separate charge of operating an unlicensed money transmission business.