In what the U.S. Department of Justice is calling the “largest international money-laundering prosecution in history,” Liberty Reserve was allegedly laundered over $6 billion in “criminal cash,” reports the BBC.
After an investigation that spanned 17 countries, Liberty Reserve was indicted for allegedly laundering money for heinous criminal enterprises like identity theft, investment fraud, child pornography, and drug trafficking, among many others. According to a U.S. DOJ press release, Liberty Reserve had over 200,000 user in America, over one million globally, and made about 55 million transactions.
“The only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes, as it became a popular hub for fraudsters, hackers, and traffickers,” said U.S. Attorney Preet Bharara during a press conference. “And the global enforcement action we announce today is an important step towards reining in the Wild West of illicit internet banking.”
Liberty Reserve began in 2006 and touted itself as the “largest payment processor and money transfer system” on the internet. Although the company allowed hundreds of thousands of American’s to conduct financial transactions, Liberty Reserve never registered its status as a money transmitting business. By law, any institution that offers such a service must register with the U.S. Department of Treasury.
The way Liberty Reserve was able to create such a huge operation is that users didn’t have to validate their identity when making an account. Because criminals enjoyed a high level of anonymity, they were able to stash their funds with impunity. The DOJ press release indicated that some accounts were actually very overt about crime. Some accounts had titles like “Russia Hackers” and “Hacker Account.”
Liberty Reserve had a “shopping cart interface” feature through which “merchants” could obtain currency. These “merchants,” however, included people who trafficked stolen credit card information, computer hackers, and drug-dealing sites.
“The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system,” said Acting Assistant Attorney General Mythili Raman. “By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, . . . our message is clear: money launderers can run, but they can’t hide from the U.S. justice system.”
Joshua de Leon is a writer and researcher with Ring of Fire.