Exchanges

Liberty Reserve Bitcoin Exchange Founder Pleads Guilty to Money Laundering $250 Million in “Criminal Proceeds”

The founder of Liberty Reserve, a now defunct Costa Rica-based digital currency , pleaded guilty today to running a massive money laundering enterprise, according to US Department of Justice officials.

Leslie Caldwell, Assistant Attorney General of the Justice Department’s Criminal Division, and Preet Bharara, US Attorney of the Southern District of New York, revealed Friday that Arthur Budovsky pleaded guilty to one count of conspiring to commit money laundering before US District Judge Denise L. Cote of the Southern District of New York.

In his plea agreement, Budovsky admitted to laundering more than $250 million in”criminal proceeds” and is scheduled to be sentenced on May 6, 2016.

Caldwell stated:

“After a prior conviction for operating an unlicensed money transmitting business, Budovsky developed Liberty Reserve, which quickly became a premier service used by criminals around the world to launder their criminal proceeds. As a result of this global investigation, however, Budovsky was returned to the United States to face justice once again.Arthur Budovsky founded and operated Liberty Reserve, an underworld cyber-banking system that laundered hundreds of millions of dollars in illicit proceeds for criminals around the world. The only liberty that Budovsky and Liberty Reserve promoted was the freedom to commit and profit from crime.  Thanks to this truly global investigation that included cooperation from 17 countries, Liberty Reserve has been shut down, and its founder Arthur Budovsky stands convicted in an American court of law, facing the loss of his own liberty.”

Bharara added:

“Arthur Budovsky founded and operated Liberty Reserve, an underworld cyber-banking system that laundered hundreds of millions of dollars in illicit proceeds for criminals around the world. The only liberty that Budovsky and Liberty Reserve promoted was the freedom to commit and profit from crime.  Thanks to this truly global investigation that included cooperation from 17 countries, Liberty Reserve has been shut down, and its founder Arthur Budovsky stands convicted in an American court of law, facing the loss of his own liberty.”

According to the indictment filed against Liberty Reserve, Budovsky and six co-defendants, Budovsky specifically designed Liberty Reserve, which billed itself as the Internet’s “largest payment processor and money transfer system,” to help users conduct anonymous and untraceable illegal transactions and launder the proceeds of their crimes.  From its inception in or about 2006, Budovsky directed and supervised Liberty Reserve’s operations, finances and business strategy.  To grow the business and evade the scrutiny and reach of US law enforcement, Budovsky emigrated to Costa Rica, where he and other defendants began operating Liberty Reserve, and in 2011, Budovsky renounced his U.S. citizenship and became a Costa Rican citizen.  Budovsky told US immigration authorities that his company was developing a software that “might open him up to liability in the U.S.”

The US Department of Justice officials assert that Liberty Reserve became one of the principal money-transmitting services used by cybercriminals around the world to amass, distribute, store and launder the proceeds of their illegal activity, including proceeds of investment fraud, credit card fraud, identity theft and computer hacking.  Before the US government shut down the Costan Rican digital currency exchange in May 2013, it had more than 5 million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and had processed millions of transactions.

According to US authorities, four co-defendants, Vladimir Kats, Azzeddine El Amine, Mark Marmilev and Maxim Chukharev, have already pleaded guilty.  Marmilev and Chukharev were sentenced to five years and three years in prison, respectively.  Kats and El Amine await sentencing before Judge Cote, while harges remain pending against Liberty Reserve and two other individual defendants who are fugitives.

The US Secret Service, the Internal Revenue Service-Criminal Investigation and the US Immigration and Customs Enforcement’s Homeland Security Investigations cooperated in the case against Liberty Reserve as part of the Global Illicit Financial Team.  The US Secret Service’s New York Electronic Crimes Task Force assisted with the investigation.  The Judicial Investigation Organization in Costa Rica, Interpol, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance.

Journalist, policy analyst, and evangelist of new, disruptive technologies including big data analytics, Internet of Things, and cryptocurrencies. Internet industry veteran with regional c-suite experience, and journalist credentials earned at internet.com, Internet World magazine, and Mecklermedia Corporation.
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