Liberty Reserve a money hub for crooks: Feds
US officials say Liberty Reserve enabled users to commit crimes, and became a popular hub for fraudsters, hackers, and traffickers.
When an undercover agent posing as a new client sought to register at the currency transfer firm Liberty Reserve as “Joe Bogus” from “123 Fake Main Street” in “Completely Made Up City,” no one at the company based in Costa Rica objected.
The same client recording digital currency transactions as “ATM skimming work” and “for the cocaine”? Still no problem.
In fact, federal prosecutors in Manhattan say anonymity and criminality were what Liberty Reserve was all about.
“The only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes, as it became a popular hub for fraudsters, hackers, and traffickers,” US Attorney Preet Bharara said Tuesday in announcing charges against seven people in a $6 billion scheme that he billed as possibly the largest money-laundering scheme even seen in the United States.
“The coin of the realm ... was anonymity — multiple layers of anonymity,” he added. “As alleged, Liberty Reserve was deliberately structured and operated in a way to help other criminals remain anonymous, untraceable and untouchable.”
US officials said the enterprise was staggering in scope: Over roughly seven years, Liberty Reserve processed 55 million illicit transactions worldwide for 1 million users, including 200,000 in the US The network charged a 1 per cent fee on transactions through “exchangers” — middlemen who converted actual currency into virtual funds and then back into cash.
In the indictment, prosecutors called Liberty Reserve “one of the principal means by which cyber criminals around the world distribute, store and launder proceeds of their illegal activity ... including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.”