Liberty Reserve is an electronic payment system registered in Costa Rica . The system was designed to make Internet payments and was used by more than a million users. Using the system, illegal transactions were carried out, which led to its closure [1] .
In May 2013, Liberty Reserve was destroyed by the actions of US federal prosecutors in accordance with the anti-terrorism Patriotic Act after an investigation conducted in 17 countries. The United States accuses its founder Arthur Budovsky (a Costa Rican citizen of Ukrainian origin) and six of his accomplices in money laundering and fraud using transactions of an unregistered financial company. The total turnover of Liberty Reserve funds over the entire period of activity is estimated at 6 billion US dollars [2] . According to prosecutors, the case "could be the largest international money laundering case ever to occur in the United States."
Content
Description
To register users, a name, email address and date of birth were required; according to the same data, translations were made [3] . Verification of identity was not carried out, which made the system attractive to scammers [4] . Money could be deposited through third-party exchange organizations using cards or bank transfers [3] [1] . Liberty Reserve did not process such payments directly [1] . Inside the system, the currencies Liberty Reserve Dollars and Liberty Reserve Euros were used, tied to the value of the US dollar and Euro, as well as the currency tied to gold [3] [5] . The size of the transactions is not limited [6] , however, each commission was charged in the amount of approximately 1% (no more than $ 2.99 (£ 1.98) [3] [7] ). There was no opportunity to cancel the transaction [6] . Liberty Reserve also offered functionality for online stores (API and SCI) [6] .
The service was popular not only in the criminal environment, but also among exchange rate players and multilevel marketing companies [5] [1] .
By the time of closure, the site had about 1 million users (200 thousand from the USA) [4] .
The currency was part of the Global Digital Currency Association [6] .
The Liberty Reserve system had a referral program.
Closing Consequences
According to Brian Krebs, the closure of Liberty Reserve could cause significant changes in the economy of cybercrime [3] . Due to the closure of the site, users lost access to their own money [8] .
In the comments of Forbes, it was noted that after LR, the attention of the authorities can attract the electronic currency Bitcoin . For example, in May 2013, DHS confiscated about $ 5 million from the accounts of the owner of MtGox [9] [10] [11] .
Notes
- ↑ 1 2 3 4 Marc Santora . Online Currency Exchange Accused of Laundering $ 6 Billion , The New York Times (May 28, 2013). Date of treatment May 28, 2013.
- ↑ Jack Cloherty . 'Black Market Bank' Accused of Laundering $ 6B in Criminal Proceeds , ABC News (May 28, 2013). Date of treatment May 28, 2013.
- ↑ 1 2 3 4 5 Liberty Reserve digital money service forced offline , BBC (May 27, 2013). Date of treatment May 27, 2013.
- ↑ 1 2 Jack Cloherty . 'Black Market Bank' Accused of Laundering $ 6B in Criminal Proceeds , ABC News (May 28, 2013). Date of treatment May 28, 2013.
- ↑ 1 2 David Boddiger . Millions of dollars in limbo after shuttering of digital currency site Liberty Reserve , Tico Times (May 25, 2013). Archived December 31, 2013. Date of treatment May 28, 2013.
- ↑ 1 2 3 4 Liberty Reserve - Interview with Mr. Joul Lee pt. 1, Digital Money World (July 22, 2007).
- ↑ Comparison table of commission payments Liberty Reserve with other payment systems . Archived July 26, 2016. Date of treatment August 18, 2016.
- ↑ US prosecutes '$ 6bn money-laundering hub' . BBC Date of treatment May 29, 2013.
- ↑ Cohan, Peter. After Liberty Reserve Shut Down, Is Bitcoin Next? . Forbes (May 29, 2013). - “And federal prosecutors may be looking for ways to shut down Bitcoin exchanges or intermediaries .. it looks like they could close Bitcoin if the bridges that connect the US financial system to its virtual one do not comply with FinCEN regulations or violate the Patriot Act . ". Date of treatment May 30, 2013.
- ↑ Joe Mullin . Feds reveal the search warrant used to seize Mt. Gox account. Bitcoin exchange shouldn't be dealing in "crypto-currency" without a license. , ArsTechnica (May 15, 2013). Date of treatment November 18, 2013.
- ↑ ROBERT MCMILLAN. Feds Reveal What They Really Think About Bitcoin . Wired (November 15, 2013). - “First, the feds shutdown Liberty Reserve, a Costa Rican digital currency service. Then, they busted the Silk Road, an online drug marketplace that used bitcoin, the world's most popular digital currency. And, now, they're really starting to think hard about this new breed of internet money. ". Date of treatment November 18, 2013.
Links
- LibertyReserve.com - official site (English) (archived copy)
- US Justice Department indictment
- Description of the Liberty Reserve payment system (Russian)