Liberty Reserve's lesson: Don't take liberties with the law
There's at least one lesson to be learned from the recent closure of Liberty Reserve for alleged money laundering: whether you use "real" government-backed fiat or a distributed digital currency controlled by no one in particular, what you use it for is subject to laws and regulations of many kinds. Fall afoul of those, and the authorities will sooner or later come looking for you. The Costa Rica-based Liberty Reserve used its own digital currency -- also called the Liberty Reserve, or LR -- to provide low-cost payment processing services to customers around the world. Its ease of payments....
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Bitcoin was not the first type of online money to be ever created, as it was preceded by E-Gold and Liberty Reserve, to name a few. The creator of Liberty Reserve was sentenced to 20 years in prison on May 6th. Ever since its inception, there has been a lot of discussion about the validity of Liberty Reserve. Transferring money over the Internet with....
The concept of digital currency was well-known way before Bitcoin and consorts staked their claim. One of the most notorious digital currencies in history is Liberty Reserve, which ultimately failed because it was still centralized. Furthermore, the founder of Liberty Reserve pleaded guilty to money laundering recently, a concept that is not possible with Bitcoin by any means. One of the main reasons why Liberty Reserve became so popular and well-known throughout the years is because this digital currency was used for criminal activities all over the world. Laundering money online was....
Liberty Reserve, a Costa Rica-based private currency exchange with its own digital currency, has shut down around the same time its founder has been arrested in connection with a money laundering investigation. Arthur Budovsky, the exchange's founder, was arrested Friday in Spain, according to the Costa Rican newspaper The Tico Times. The paper reported that the money laundering investigation was a joint operation between authorities in the US and Costa Rica. (This YouTube video, posted Saturday, features a Costa Rican prosecutor discussing the investigation.) It added that US authorities....
The Bitcoin Foundation has asked the Financial Crimes Enforcement Network (FinCEN) to make sure its rule against Liberty Reserve doesn't suggest all virtual currency transactions are inherently suspect. The foundation has written a letter to FinCEN in response to its proposed rule on the 'Imposition of Special Measure Against Liberty Reserve S. A. as a Financial Institution of Primary Money Laundering Concern'. In the rule, FinCEN states that "Liberty Reserve's system is structured so as to facilitate money laundering and other criminal activity," and cites the anonymity of the system and....