From The Guardian UK: http://www.guardian.co.uk/business/2013/may/28/liberty-reserve-accused-money-laundering
Federal prosecutors in New York shut down Costa Rica-based digital currency firm and claim it was the ‘financial hub of the cyber-crime world’
Dominic Rushe in New York
guardian.co.uk, Tuesday 28 May 2013
Federal prosecutors in New York have accused a Costa Rica-based company and its founder of running a $6bn money-laundering scheme that became a “bank of choice for the criminal underworld”.
Digital currency company Liberty Reserve was involved in one of the biggest money-laundering operations ever uncovered, according to an indictment on Tuesday by Preet Bharara, the US attorney for the southern district of New York.
Liberty was the “financial hub of the cyber-crime world”, according to the indictment. It facilitated “a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking”.
The indictment follows law enforcement actions in 17 countries. Five men, including founder Arthur Budovsky, have been arrested and charged with money-laundering and with operating an unlicensed money transmitting business. Two other people are mentioned in the indictment and are believed to be at large.
Liberty Reserve was incorporated in Costa Rica in 2006 and was one of the world’s most widely used digital currencies. The service allowed account holders to send a receive payments from anywhere in the world. Liberty described itself as the internet’s “largest payment processor and money transfer system”, serving “millions” around the world.
According to the indictment Liberty Reserve processed more than 12m financial transactions annually with a value of more than $1.4bn. The US authorities claim “virtually all” of the activity related to suspected criminal activity. From 2006 to May 2013 Liberty “laundered more than $6bn in criminal proceeds,” the indictment states.
A spokesman for Liberty Reserve could not immediately be reached for comment.
Account holders were not required to prove their identity. They converted local currency into Liberty Reserve dollars using third-party “exchangers” who charged a fee then forward the money to Liberty Reserve, according to the indictment. Deposits were similarly done through exchangers in order to add another layer of anonymity.
Continue reading at: http://www.guardian.co.uk/business/2013/may/28/liberty-reserve-accused-money-laundering
