US charges Liberty Reserve over $6bn money laundering scam

US charges Liberty Reserve over $6bn money laundering scam

Liberty Reserve has been shut down and its founder arrested over claims that the digital currency outfit was used by crooks to launder more than $6 billion.

In a raid over the weekend, Arthur Budovsky, the Costa Rica-based firm's principal founder was arrested in Spain. As part of an international operation, involving 17 countries, another four people were picked up in Spain, the US and Costa Rica, where another two suspects remain at large.

Incorporated in Costa Rica in 2006, Liberty Reserve is alleged by US authorities to have been set up as a bank-payment processor designed to help users conduct illegal transactions anonymously and launder the proceeds of their crimes.

It had more than one million users worldwide, who conducted approximately 55 million transactions - virtually all of which were illegal - and laundered more than $6 billion in suspected proceeds of crimes including credit card fraud, identity theft, computer hacking, child pornography and narcotics trafficking.

As well as bringing charges against seven suspects, authorities have seized five domain names - including Liberty Reserve's.

As much as $40 million in Liberty reserv funds has found its way into the global banking system and prosecutors have restrained or seized 45 bank accounts as part of the crackdown.

US Attorney Preet Bharara says: "As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes - the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce today is an important step towards reining in the 'Wild West' of illicit Internet banking."

Comments: (2)

Neil Crammond
Neil Crammond - DIVENTO FINANCIALS - London 29 May, 2013, 10:25Be the first to give this comment the thumbs up 0 likes

 the question to ask is why it took so long to find out as some of their tradesmust of rung huge alarm bells within market supervision dept at exchanges and regulators ...........?

   Sadly perhaps market abuse has become a major player in our mkts .

A Finextra member
A Finextra member 29 May, 2013, 10:45Be the first to give this comment the thumbs up 0 likes If one reads between the lines, it's not about money-laundering, but about state monopoly on fiat currency. As banking system was involved, if there are KYC and AML "gaps", why do you need a digital currency to exploit the loopholes... It's a simple (and powerful) warming, similar to the one sent to the CEOs of the European betting firms when they considered "muscling in" on the US turf... Huawei was another example. And it's not just the US phenomenon - Russia, China, India and many other states (or people close to the government) do look after their own golden geese...