The founder of Liberty Reserve, a digital currency company, has been charged with running a $6bn money-laundering scheme, along with six other current and former employees. U.S. prosecutors allege that the Costa Rica-based business processed 55 million transactions since 2006, becoming “the bank of choice” for cybercriminals.
“Liberty Reserve has emerged as one of the principal means by which cybercriminals around the world distribute, store and launder the proceeds of their illegal activity,” said the indictment, at the U.S. District Court for the Southern District of New York.
Five employees, including Liberty Reserve’s founder Arthur Budovsky, were arrested over the weekend. U.S. Attorney Preet Bharara described the case as “the largest international money laundering case ever brought by the United States”. The authorities allege that Liberty Reserve was “a financial hub of the cybercrime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking”.
Setting up an account with Liberty Reserve required little more than a valid email address. U.S. Attorney Preet Bharara said that an undercover agent had been able to set up an account with Liberty Reserve in the name, “Joe Bogus,” with an address of “123 Fake Main Street” in “Completely Made Up City, New York,” according to Bloomberg.
Court papers state that an international gang of cyber thieves who stole $45 million using bank ATMs in a heist spread across 27 countries used Liberty Reserve to distribute the profits.
Liberty Reserve charged 1% for each transfer, plus a 75c “privacy fee” to make transactions untraceable, according to the Financial Times. Court papers show accounts in false names such as “Russia Hackers” and “Hacker Account”, according to prosecutors.
Author Rob Waugh, We Live Security