Online currency exchange, Liberty Reserve, is accused in laundering $6 billion. It is a central hub for criminals trafficking in everything from stolen identities to child pornography, federal prosecutors in New York said.
According to Preet Bharara, the United States attorney in Manhattan, and other law enforcement officials, it is the largest online money-laundering case in history. The cyber money-laundering scheme included 1 million users worldwide, with more than 200,000 users in the US. Over seven years, 55 million transactions were conducted through Liberty Reserve, the prosecutors said.
From 2006 to 2013, Liberty Reserve became one of the world’s most widely used digital currency services but it appeared to be a “financial hub of the cybercrime world”. The profits from criminal activities were processed anonymously and ranged from identity theft and credit card fraud to computer hacking, investment fraud, child pornography, and drug trafficking.
Court documents describe an Internet-based operation of “staggering” scope that served as a vital tool for cyber thieves and criminals to first convert ill-gotten cash to an anonymous digital currency – then, later, convert it back into cash and transmit it to banks worldwide.
Anonymity was one of the key points of Libert Reserve. “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 US Attorney Preet Bharara said, in a statement. “As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”
Libery Reserve users used to create fake accounts by using false names, such as “Russia Hackers” and “Hacker Account”. During the investigation, one agent opened and executed transactions under the name of “Joe Bogus” with the address “123 Fake Main Street” in “Completely Made Up City, New York.”
Liberty Reserve was found in Costa Rica in 2006 by Arthur Budovsky, who renounced his United States citizenship in 2011, and was arrested in Spain on Friday. He was one of the seven people who were charged in the case. Five of them were under arrest, two remained at large in Costa Rica. All of them were charged with conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and operating an unlicensed money-transmitting business. The money-laundering count carries a maximum sentence of 20 years in prison, and the other two charges carry a maximum of 5 years each.
In addition to criminal charges, five domain names were seized, including the one used by Liberty Reserve. Officials also seized or restricted the activity of 45 bank accounts.
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