Against the backdrop of payment processors continuing to provide services to the MLM underbelly’s shadiest of schemes, the Liberty Reserve money laundering case continues.

Once describing itself as ‘the oldest, safest and most popular payment processor’, Liberty Reserve was
shutdown in mid 2013 for money laundering
.

Co-founder Vladmir Kats was the first to accept responsibility, having
pled guilty
to ‘
money laundering and operating an unlicensed money transmitting business’ 
last November.

Kat’s partner and fellow Liberty Reserve co-founder, Arthur Budovsky Belanchuk, was arrested in Spain. His offices in Costa Rica were also raided.

US authorities have been working to extradite Budovsky, with the Department of Justice
announcing the success of those efforts
last Friday.

The founder of Liberty Reserve, a virtual currency used by cybercriminals around the world to launder proceeds of their illegal activity, was extradited from Spain and arrived in the United States this afternoon.

The Department of Justice also revealed additional information about Budovsky and his alleged criminal activities:

Arthur Budovsky allegedly built Liberty Reserve overseas to provide the international underworld with a crime-friendly digital currency and elude the scrutiny of American authorities,” said Assistant Attorney General Caldwell.

“With the cooperation of our foreign partners in Spain and elsewhere, this case and extradition are a clear example that money launderers can run, but they cannot hide from the Department of Justice.”

“For years, Arthur Budovsky allegedly
enabled criminals in the United States and around the world to process illegal payments and to launder billions of dollars in crime proceeds through Liberty Reserve,
” said U.S. Attorney Bharara.

Like I said in the beginning of this piece, even today there are 
still
payment processors operating with an open-door compliance policy regarding MLM clients. In the wake of the Liberty Reserve shutdown, Solid Trust Pay is probably the most recognizable.

i-Payout weren’t far behind but appear to have made efforts to
clean up their client roster
of late.

According to allegations contained in the indictment and statements made in related court proceedings, Liberty Reserve was born out of Budovsky’s unsuccessful experience running a third-party exchange service, called Gold Age Inc., for another digital currency, called E-Gold.

In or about 2006, Budovsky was convicted in New York State of operating Gold Age Inc. as an unlicensed money transmitting business.

In 2007, the operators of E-Gold were also charged with criminal offenses, including money laundering and operating an unlicensed money transmitting business, and subsequently ceased doing business.

In the wake of his own criminal conviction, Budovsky set about building a digital currency that would succeed in eluding law enforcement where E-Gold had failed, by, among other ways, locating the business outside the United States.

Acc

🤖 Quick Answer

What was Liberty Reserve and why was it shut down?
Liberty Reserve was a payment processor that operated until mid-2013, claiming to be the oldest, safest and most popular service of its kind. It was shut down by US authorities for facilitating money laundering activities and operating without proper licensing as a money transmitting business.

Who were the founders of Liberty Reserve and what legal consequences did they face?
Liberty Reserve was co-founded by Vladimir Kats and Arthur Budovsky Belanchuk. Kats pleaded guilty to money laundering and operating an unlicensed money transmitting business in November. Budovsky was arrested in Spain, and US authorities successfully extradited him following raids on his Costa Rican offices.

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