The US Attorney Press release puts it nice:
"SHREM, who personally bought drugs on Silk Road, was fully aware that Silk Road was a drug-trafficking website, and through his communications with FAIELLA, SHREM also knew that FAIELLA was operating a Bitcoin exchange service for Silk Road users."
http://www.justice.gov/usao/nys/pressreleases/January14/Schr... (note the 14 Jan in URL and 27Jan release date; first draft Press release, then make arrests)