Criminal Justice

Feds say alleged $6 billion money-laundering scheme used Internet-based currency

Updated: In what reportedly may be the largest alleged money-laundering scheme ever prosecuted, the federal government has charged seven men with creating an Internet-based currency for the purpose of washing $6 billion in criminal proceeds.

Liberty Reserve, based in Costa Rica, was a “bank of choice for the criminal underworld” for nearly seven years, says the indictment filed by federal prosecutors in Manhattan. It alleges that the company required only an email address from customers and engaged in 55 million transactions prior to being shut down, essentially allowing users to transfer cash around the world with virtual anonymity, according to the New York Times (reg. req.) and the Wall Street Journal (sub. req.).

Five suspects have been arrested in Costa Rica, Brooklyn, N.Y., and Spain, and two more are still at large, according to the Voice of America.

Authorities in 17 countries cooperated, and 1 million criminals may have used the service to launder money, authorities say.

The group of defendants includes Liberty Reserve founder Arthur Budovsky. Lawyers for the defendants could not be reached, the Wall Street Journal says.

Articles published at the Los Angeles Times’ Money & Co. blog and USA Today provide further details.

Updated at 5 p.m. to include Voice of America coverage.

We welcome your comments, but please adhere to our comment policy and the ABA Code of Conduct.

Commenting is not available in this channel entry.