NEW YORK: US authorities revealed yesterday they had shut down a Costa Rica-based money transfer company they said helped cybercriminals around the world launder around $6bn in illicit funds using digital currency.
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.
Costa Rican prosecutor José Pablo González said Liberty Reserve and related businesses were used to launder funds from child pornography websites and drug trafficking.
Digital currency is made up of transferable units that can be exchanged for cash. Over the past decade, its use has expanded. The most widely known digital currency is called Bitcoin. Liberty Reserve’s currency was not connected to Bitcoin.
Along with the five arrests, prosecutors filed charges against two more company employees, who are at large in Costa Rica.
According to an indictment filed in a US District Court, Liberty Reserve’s currency unit was called the “LR.” The company’s users opened accounts at Liberty Reserve giving only a name, address and date of birth that the company made no attempt to verify. Once a user had a Liberty Reserve account, he or she could use cash to purchase LRs from third-party exchange merchants, which traded LRs with each other in bulk and charged fees to make the exchanges between LRs and hard cash.
Liberty Reserve users could transfer the digital currency units called LRs to each other, to be redeemed in different parts of the world for cash using the third-party exchange companies.
REUTERS
