Liberty Reserve money-laundering case: five questions answered
Federal law enforcement has charged Liberty Reserve, a digital currency provider, with running a $6 billion digital money-laundering scheme. Prosecutors are calling it possibly the biggest money-laundering case in US history, and one that marks several firsts in the way cyber-finance is policed globally. Here five basic questions about the Liberty Reserve case, answered:
1. What is Liberty Reserve?
Before being effectively shut down, Liberty Reserve was a digital currency service, similar in function to PayPal, that allowed for anonymous monetary transactions on the Web. Unlike traditional banks and legitimate online commerce sites, Liberty Reserveâ€™s users could set up accounts using fake names and unverified personal information â€“ all they needed was an e-mail address. It was, prosecutors say, designed as a way for criminals to process money quickly, conveniently, and undetected. â€śIf Al Capone were alive today, this is how he would be hiding his money,â€ť said Richard Weber, head of the criminal investigation division of the Internal Revenue Service (IRS), at a New York press conference that involved members of the Justice and Treasury departments, Secret Service, and Homeland Security.
The company was incorporated in Costa Rica in 2006 and operated â€śessentially as a black market bankâ€ť Manhattan US attorney Preet Bharara said at the press conference. Over a seven-year span, Liberty Reserve allegedly hosted about 55 million transactions totaling $6 billion related to criminal activity, including â€ścredit card fraud, identity theft, investment fraud, child computer hacking, child pornography, and even narcotics trafficking,â€ť Mr. Bharara said.
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