Original URL: http://www.theregister.co.uk/2013/05/28/liberty_reserve_titsup/

'$6bn money-laundering website' Liberty Reserve kingpin cuffed in Spain

Feds seize 'cyber-crooks' favourite' dot-com, lay charges

By John Leyden

Posted in Security, 28th May 2013 16:04 GMT

Shadowy online money exchange Liberty Reserve has been shut down by the US feds, its dotcom website seized - and its founder arrested. He and six others are accused of running a $6bn global money-laundering operation, the biggest of its kind, according to prosecutors.

In a string of dramatic events,

Liberty Reserve asked for just an email address, a name and a date of birth from its users when they wished to transfer cash electronically: the money was converted into "Liberty Reserve Dollar" or "Liberty Reserve Euro" digital currencies and quickly moved with minimal bureaucracy and transfer fees no higher than $3 a transaction. These features apparently made the service popular with criminals - at least 55 million transactions were carried out - according to US prosecutors who led the investigation into Liberty Reserve.

During a press conference on Saturday, soon after the web money service went dark, Costa Rican state prosecutor Jose Pablo Gonzalez said a number of suspects as well as Budovsky were under investigation over alleged money laundering.

Today's US indictment, issued by the New York's southern district attorney's office, also links Exchangezone.com, Swiftexchanger.com, MoneyCentralMarket.com, AsianaGold.com and EuroGoldCash.com to the Liberty Reserve operation.

The official paperwork claims "the defendants [operated] an international online digital currency service and money transfer system called Liberty Reserve … which was incorporated in Costa Rica in 2006 [and] is extensively used by cybercriminals around the world for distributing, storing and laundering the proceeds of their criminal activity".

The Feds further alleged that Budovsky and his co-conspirators knowingly operated "a criminal business venture" that moved tens of millions of dollars around the world through a network of shell companies - a move to keep the cash beyond the reach of American and European investigators, it is claimed.

Budovsky was indicted in 2006 on similar charges of operating an illegal money business, called GoldAge Inc, from a New York apartment. The Feds alleged that the service transferred $30m during a four-year operation prior to its closure. Budovsky and co-defendant Vladimir Kats were found guilty and sentenced to five years' probation in 2007. However Budovsky failed to see out his punishment and fled to Costa Rica, where he set up Liberty Reserve. He also renounced his US citizenship and became a Costa Rican national.

Today's indictment charges Budovsky, Vladimir Kats, Ahmed Yassine Abdelghani, Allan Esteban Hidalgo Jimenez, Azzeddine El Amine, Mark Marmilev and Maxim Chukharev. The defendants are presumed innocent unless and until proven guilty. ®