Liberty Reserve Indicted on Digital Currency Money-Laundering Charges
NEW YORK — A federal grand jury has indicted Liberty Reserve, a major digital currency company, and its top executives in what authorities billed as history’s biggest-ever international money-laundering case.
The alleged $6-billion scheme spanned the globe and involved more than 1 million users worldwide, according to the indictment announced Tuesday. Prosecutors cited 55 million illicit transactions as part of the scheme, calling Liberty Reserve a “financial hub of cyber-crime world.”
“The defendants deliberately attracted and maintained a customer base of criminals by making financial activity on Liberty Reserve anonymous and untraceable,” the indictment said.
A news conference was scheduled later Tuesday by Preet Bharara, the U.S. attorney in Manhattan.
The federal government’s prosecution against Liberty Reserve highlights concerns that emerging forms of digital currency and electronic payments could be used by criminals to hide their illicit profits.
The Liberty Reserve case comes as global banks have come under increased scrutiny in recent years for violations of U.S. laws aimed at stamping out money-laundering.
In an unsealed indictment, Liberty Reserve, which is based in Costa Rica, is accused of moving tens of millions of dollars through shell companies in Cyprus, Russia, Hong Kong, China, Morocco, Spain and other countries.
Liberty Reserve became a prime method by which cyber-criminals laundered their illegal profits, according to the indictment. Liberty Reserve became the “financial hub” for identity theft, credit-card fraud, hacking, child porn and narcotics trafficking, authorities said.
Along with the company, Liberty Reserve’s founder, Arthur Budovsky, was also indicted. So were co-founder Vladimir Kats and five other employees.