14 DAY TRIAL // US authorities have cracked down on Liberty Reserve, the virtual currency that’s often used by cybercriminals to monetize their illegal activities.
The founder of the currency system, a Ukrainian citizen from Costa Rica going by the name of Arthur Budovsky, was arrested last Friday in Spain. Other individuals, believed to be his co-conspirators, were arrested in New York and Costa Rica.
An indictment has been filed in the US District Court for the Southern District of New York against Budovsky and five other individuals.
They’ve been charged with conspiracy to commit money laundering, punishable with up to 20 years in prison; conspiracy to operate an unlicensed money transmitting business, for which they can get up to 5 years; and operation of an unlicensed money transmitting business, which carries a maximum term of 5 years in jail.
According to the document obtained by Brian Krebs, prosecutors believe Liberty Reserve processed around $6 billion (€4.6 billion) since 2006 and up until now. It’s said that over 12 million financial transactions were processed each year.
In addition to the arrests and charges, domain names, and bank accounts have been seized.
While Liberty Reserve is used in many cases for legitimate purposes, the US government argues that the defendants protected the criminal infrastructure of the payment processor by lying to authorities and by pretending to shut down the service when they learned they were being investigated.
The Department of Justice says Liberty Reserve facilitated illegal activities such as computer hacking, investment fraud, narcotics trafficking, credit card fraud and identity theft.
“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,” Manhattan U.S. Attorney Preet Bharara said.
“The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”