Liberty Reserve has been shut down and its founder is facing serious money laundering charges.
Arthur Bodovsky, the Costa Rican behind the company was arrested in Spain this weekend and will likely be turned over to US authorities in the near future.
The indictment accuses Liberty Reserve of functioning as a, “PayPal for criminals,” because of its loose, no-questions-asked/no-ID-required, money transfer policies. Authorities say the service was being utilized by everyone from criminal gangs to child pornographers, and unregulated gambling operations across the world.
Liberty Reserve is also a top spot for Bitcoin, and other tough-to-track, transactions. The company was able to skirt many standard reporting regulations by running the deals through third parties and charged a 1% transaction fee.
That fast and loose interpretation of the rules wasn’t enough for the US Attorney’s Office in Manhattan. Investigators for the office were able to set up Liberty Reserve accounts using made names such as, “Joe Bogus” and transfer money at-will and anonymously.
As it stands, Liberty Reserve funds are locked up and that’s a big problem for lots of people doing legitimate and nefarious business online. According to published reports, online forums were abuzz this weekend with news of how the shutdown had stalled various enterprises.
Some estimates claim that Liberty has laundered as much as $6 billion across 55 million illegal transactions for a criminal client base that numbers around a million.
US Attorney Preet Bharara (the scourge of many an online gambling operation) is behind the investigation and will be hosting a press conference later today.
Have you been impacted by the Liberty Reserve shutdown? Share your experiences in the comments section below.