NEW YORK – U.S. authorities said on Tuesday they have shut down a Costa Rica-based money transfer company that allegedly provided a digital currency widely used around the world by cyber-criminals.
In a statement, officials said authorities in Spain, Costa Rica and New York arrested five people on Friday and seized bank accounts and Internet domains associated with the company, Liberty Reserve.
The digital currency is a transferable unit that can be exchanged for cash.
Along with the five arrests, prosecutors filed charges against two more company employees, who were still at large in Costa Rica.
According to an indictment filed in U.S. District Court for the Southern District of New York, “Liberty Reserve has emerged as one of the principal means by which cyber-criminals around the world distribute, store and launder the proceeds of their illegal activity.”
The indictment said the company had more than a million users worldwide, including at least 200,000 in the United States, and virtually all of its business was related to suspected criminal activity.
You can read the indictment here. They accuse Liberty Reserve of not registering as a money transmitter and of being a money laundering service that catered exclusively to criminals. Of course, no evidence was presented that demonstrated all of Liberty Reserve’s clients were criminals. In fact, it is impossible to prove that all of Liberty Reserve’s clients were criminals because Liberty Reserve made sure all of its clients remained anonymous.
The state is prosecuting Liberty Reserve because they respected their customers privacy. The state’s actions are a clear violation of the 4th amendment. Of course, the Constitution is a worthless document when it comes to the actives of thieves like the IRS. They could care less about your right to privacy.
Of course, don’t expect the real money laundering kingpins to ever be arrested.
Wachovia: deferred prosecution
HSBC: fine, no one arrested
Bank of America: out of court settlement
Bank of America, Barclays, JP Morgan, Citigroup: out of court settlements
etc.. etc.. etc..
The message here is rather clear. If you launder money for cartels using fiat money systems, the most you’re going to face is a fine. However, if you support electronic currencies that undermine the fiat empire, you will be caged.