Liberty Reserve: The Face of Cyber-Laundering

Product Description

Abstract

“If Al Capone were alive today, this is how he would be hiding his money,” Richard Weber of the Internal Revenue Service said of Liberty Reserve, a now-defunct digital currency platform used for money laundering by criminals.

According to authorities, from 2006 to 2013, Liberty Reserves’ over one million users utilized the site and its digital currency to launder more than $6 billion in criminal proceeds. Authorities said that co-founder Arthur Budovsky was not only aware of this activity but also actively designed Liberty Reserve to help criminals conduct illegal transactions and launder illicit proceeds. Budovsky evaded anti-money-laundering regulation and seizure of funds, requiring a global investigative team and law enforcement from ten countries to take down the company. With the demise of Liberty Reserve, there exists a vacuum in the cyber-underworld and the possibility that Bitcoin’s decentralized currency will become a major player in illicit activity.

This case explains the fundamentals and history of digital currency, focusing on the rise of Liberty Reserve as a black market bank for conventional criminals and cybercriminals. The case also explains the mechanisms of Liberty Reserve, such as the exchangers that severed the financial paper trail for funds passing through Liberty Reserve, and the events that led to Liberty Reserve’s takedown.

Learning Objectives

• Become familiar with the mechanisms and variations of digital currency.
• Understand the history of Liberty Reserve and the circumstances surrounding its takedown.
• Consider the future of digital currency in illicit operations and ways to combat criminal uses.

Subjects Covered

money laundering, cybercrime, digital currency, Bitcoin, black market bank, exchangers, takedowns, cyberlaundering

Setting 

Geographic: New York, United States; Costa Rica

Industry: Digital currency

Event Start Date: 1996

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