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Fed’s Full On Assault On Currency Alternatives Goes Global

May 29, 2013 by  

Fed’s Full On Assault On Currency Alternatives Goes Global
PHOTOS.COM

Since the virtual currency Bitcoin began receiving widespread attention in the media as a viable alternative to cash, Federal agencies have been keeping a close watch on the startup and on firms with which it does business. The recent Federal attack on Liberty Reserve, another online currency, could provide clues to what government officials have in mind for Bitcoin and all future currency alternatives enabled by technology.

Liberty Reserve is an online money transfer system based in Costa Rica. On Tuesday, the Justice Department charged the company with money laundering and used the Patriot Act to lock it out of the American financial system in what Federal officials say could be the largest global prosecution of this type in history.

Arthur Bodovsky, 39-year-old Ukrainian native who moved to Costa Rica to start the business, was arrested along with five alleged co-conspirators who Federal prosecutors argue designed and operated Liberty Reserve as “a financial hub of the cyber-crime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking.”

“Overall, from 2006 to May 2013, Liberty Reserve processed an estimated 55 million separate financial transactions and is believed to have laundered more than $6 billion in criminal proceeds,” the government’s indictment reads.

Officials go on to claim that Liberty Reserve “deliberately attracted and maintained a customer base of criminals by making financial activity on Liberty Reserve anonymous and untraceable.”

Police in 17 different countries were involved in the takedown.

The government has built its case around the fact that Liberty Reserve allowed its customers to anonymously convert money into virtual currency and transfer it from account to account with a 1 percent transaction fee. Justice and the Treasury officials say this allows criminals to hide the sources of their money.

“The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking,” U.S. Attorney Preet Bharara said in a statement. “As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”

More than 1 million people (200,000 in the United States) were users of the service, according to officials.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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