Google – AFP, Sebastian Smith (AFP), 28 May 2013
 |
Customers
would go to Liberty Reserve's website to buy online currency
used in
transactions with other LR users (DPA/AFP/File, Marius Becker)
|
NEW YORK —
The United States on Tuesday unveiled what it called the world's
"largest" money laundering probe against the digital currency
operator Liberty Reserve.
The Costa
Rica-based entity, which handled huge amounts of money outside the control of
national governments, is charged with running a "$6 billion money
laundering scheme and operating an unlicensed money transmitting
business," the US Attorney's office for New York said.
Prosecutors
said Liberty Reserve processed at least 55 million illegal transactions for at
least one million users "and facilitated global criminal conduct."
The probe
involved law enforcement in 17 countries and "is believed to be the
largest money laundering prosecution in history," the prosecutor's office
said.
Liberty
Reserve's principals were arrested on Friday in a round-up launched
simultaneously in Costa Rica, Spain and in New York, sealing the fate of a
company that had been one of the most successful in the wildly popular but
increasingly scrutinized world of unofficial banking and virtual currencies.
The unsealed
indictment accuses founder Arthur Budovsky -- a former US citizen who took on
Costa Rican nationality -- and his partners of creating a firm that masqueraded
as a convenient and legitimate money transfer system.
In reality,
the organization turned itself into the "financial hub of the cyber-crime
world," the indictment said.
Customers
would go to Liberty Reserve's now shut-down website to buy the online currency,
known as LRs, that could then be used in transactions with other LR users.
The system
was not registered with the US authorities and unlike some other non-state
currency systems did not require proof of identity for users.
Adding
another important layer of anonymity, Liberty required customers to buy or sell
their LRs via third party exchangers, meaning that there was no direct link
between a customer's traditional bank account and Liberty's system.
An extra
service would allow a user to hide "his own Liberty Reserve account number
when transferring funds, effectively making the transfer completely
untraceable, even within Liberty Reserve's already opaque system."
The system,
the indictment says, was tailor-made for criminal transactions and
money-laundering, facilitating "a broad range of online criminal activity,
including credit card fraud, identity theft, investment fraud, computer
hacking, child pornography, and narcotics trafficking."
"The
scope of the defendants' unlawful conduct is staggering," the indictment
said.
"With
more than 200,000 users in the United States, Liberty Reserve processed more
than 12 million financial transactions annually, with a combined value of more
than $1.4 billion."
Budovsky
and his partners started Liberty Reserve after an earlier similar venture, Gold
Age Inc, which traded the E-Gold digital currency, was shut down by US
authorities.
It was then
that Budovsky emigrated to Costa Rica, later renouncing his US citizenship.
Virtual
currencies have grown exponentially, but face pressure on numerous fronts. The
popular Bitcoin system has come under scrutiny by financial authorities and
seen growing trading volatility.
 |
Liberty
Reserve used 45 bank accounts around the world
to transfer money
|
Related Article:
No comments:
Post a Comment