Liberty Reserve advertised itself as a “digital company which assists in on-line money transfers.” The company is charged with “money laundering.” What they were was a company that was practicing thievery at the highest level.
The company, which is accused of trafficking anything considered valuable, including stolen identities to child pornography, was indicted on Tuesday by federal prosecutors in New York.
The case involves 17 countries, and is believed to be the largest international money laundering prosecution in history.
Anyone could use their services. To join only an e-mail address was required. Liberty would in turn issue a username, and a password. The customer could then begin transferring assets all over the world.
“Liberty Reserve was in fact used extensively for illegal purposes, functioning in effect as the bank of choice for the criminal underworld,” the indictment states.
Liberty Reserve recommended a number of “preapproved exchangers” to its users, which “tended to be unlicensed money transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam,” the indictment said.
The indictment charges seven of the company’s principals and employees. Five of them were arrested Friday in Spain, Costa Rica and Brooklyn.
Liberty Reserve was incorporated in Costa Rica. Its President Arthur Budovsky was arrested in Spain Friday. He was a natural born American citizen, but renounced his citizenship in 2011. Costa Rican police raided three homes and five businesses linked to the Costa-Rican-based Liberty Reserve and seized papers and digital documents that will be turned over to US authorities.
They said the company shut its offices in Costa Rica in 2011. The website, however, had continued to operate, although it was offline on Monday.
This is not the first indictment for Budovsky. In 2007, a New York court sentenced him to five-year’s probation for operating a company similar to Liberty.
The company asked no questions and maintained anonymity for its customers. Currency of dollars, euros and rubles passed through the criminal organization providing complete freedom, and no traceability.
“You don’t need to provide your full details, or personal information, or things like that,” said Aditya Sood, a computer science doctoral candidate at Michigan State University who has studied the electronic currency in a telephone interview. “There’s no way to trace an account. That’s the beauty of the system.”
The criminal element involved in Liberty’s illegal system, was in disarray over the weekend. With their accounts frozen, and Liberty no longer in operation, they were unable to access their assets. The FBI was able to obtain the information passed through underground forums.
The indictment claims that users of Liberty’s services were predominately criminal in nature.
“They included, for example: traffickers of stolen credit card data and personal identity information; peddlers of various types of online Ponzi and get-rich-quick schemes; computer hackers for hire; unregulated gambling enterprises; and underground drug-dealing Web sites.”
In addition to the money laundering charges, documents indicate that Liberty was involved in trafficking some 45 million dollars, which was stolen from tow Mid-Eastern banks.
The Guardian Express