Liberty Reserve shut down for money laundering – What’s next?

Jun 18th 2013 at 3:48 AM

As you probably know, the Liberty Reserve website was shut down this weekend. Until the time of writing this article there is no official communication from their part. News walk around that they were closed by the government and one of theowners got arrested on the 24th of May for money laundering.

Based in Costa Rica, “Liberty Reserve was a centralized digital currency that allowed users to register and transfer money with only a name, email address and birth date. No efforts were made by the site to verify identities of its users, making it an attractive payment processor to scam” (source Wikipedia). Liberty Reserve was described as being the internet’s “oldest, safest and most popular payment processor… serving millions all around a world“.

To transfer money using LR, a user needed only to provide a name, address and date of birth. One undercover agent was able to register an account under the name “Joe Bogus” and describe the purpose of the account as “for cocaine” without being questioned. Because Liberty Reserve was incorporated outside the United States, were forced to use a provision in the Patriot Act to target the organization. The officials also said that it was the first time when the provision has been used to prosecute a virtual currency provider.

David Cohen (Under Secretary for Terrorism and Financial Intelligence for the U.S Treasury Department) said that: “We took this action because Liberty Reserve, a web-based money transfer system or virtual currency, is being exploited by criminals worldwide to store, transfer and launder the proceeds of a wide variety of illegal activity“. According to prosecutors, the case “may be the largest international money laundering case ever brought by the United States.

Beside all the scam and scammers, Liberty Reserve was also used by trusted companies and trusted users with the only purpose of exchanging services.
This is also our case, we had provided Liberty Reserve as a payment method to our users and now we have to search for other alternatives. Some of the options are PerfectMoney, WebMoney, BitCoin etc.

Digital currency Perfect Money posted a note to its site saying it would no longer accept new registrations from individuals or companies based in the United States. “We bring to your attention that due to changes in our policy we forbid new registrations from individuals or companies based in the United States of America. This includes US citizens residing overseas“.”If you fall under the above mentioned category or a US resident, please do not register an account with us. We apologize for any inconvenience caused.”

Another digital currency and probably the closest competitor to Liberty Reserve in terms of users and daily transfer volumes, WebMoney, started blocking new account signups from users in the United States at least two months ago. Among all digital currencies, the most widely known is called BitCoin which has quickly gained users’ attention.

Please to comment

sign in

Remember Me

New to IM faceplate? join free!

Lost Password? click here