Liberty Reserve founder among seven charged over US$6b laundering scam

The founder of an online currency transfer business was indicted in the United States along with six other people in a US$6 billion money-laundering scheme described as "staggering" in its scope, authorities said yesterday.

Arthur Budovsky - founder of Liberty Reserve, a currency system long favoured by cybercrime scammers - was arrested in Spain on Friday. A defendant identified as Budovsky's partner, Vladimir Kats, was in custody in New York.

The inquiry involved law enforcement in 17 countries and "is believed to be the largest money laundering prosecution in history", the prosecutor's office said.

Authorities say the network processed at least 55 million illegal transactions worldwide for one million users, including 200,000 in the US.

"The scope of the defendants' unlawful conduct is staggering," said an indictment unsealed in federal court in Manhattan.

Concern had been building on underground internet forums since Liberty Reserve went offline last week. In a statement, Costa Rica police confirmed that Budovsky had been arrested in Spain on money-laundering charges and that several premises linked to his company had been raided. A notice pasted across Liberty Reserve's website said the domain "has been seized by the United States Global Illicit Financial Team".