LibertyReserve.com Shuttered, Founder Arrested In Spain 138
hypnosec writes "Libertyreserve.com has been shut with the founder arrested by police in Spain this week over his alleged involvement in money laundering. Libertyreserve.com has been down for over three days now and the arrest seems to be the reason behind the outage. Arthur Budovsky Belanchuk, a 39-year-old male, has been arrested by Spanish authorities as a part of their ongoing investigations into money laundering. U.S. officials may very well seek his extradition."
Re:N/T (Score:5, Informative)
wtf is libertyreserve? how about a proper sumamary?
I guessed it's some bitcoin exchange. that probably wasn't sending transactions direct to DOJ.
I was wrong, it seems it was an egold clone. a money sending service. pretty much by definition running one is going afoul of US laws regardless of you having anything to do with USA..
Re:Well that's vague. (Score:4, Informative)
Laundering and tax evasion are two different things, why are you confusing them? Laundering is the process of breaking the money trail of illegal activities. You know, like organised crime, human trafficking, drug dealing...
Liberty Reserve has *NOTHING* to do with Bitcoin!! (Score:5, Informative)
There was an entire selection of e-currencies to choose from before cryptocurrencies [wikipedia.org] (Bitcoin being the first, and premier, example) were even invented by Satoshi [wikipedia.org] in 2009. Liberty Reserve wasn't even the first example of such, but indeed an often trusted replacement for the original e-Gold service [wikipedia.org] that came under fire by the US Department of Justice already over 6 years ago in 2007. There seems to be a basic confusion in the comments so far as to the blatant fundamental differences between services like LR (and e-Gold before it) and Bitcoin (and cryptocurrency derivatives thereof). As a user of centralised e-currencies multiple years before Bitcoin existed, I would like to make a couple of things clear:
The difference between services like Liberty Reserve and e-Gold and Bitcoin is that the former are centralised services operated and controlled by a single collection of people, often legally protected by an incorporated entity in the Central American/Carribean region of the Earth. The pioneers of Internet "e-currencies [wikipedia.org]" such as these specifically chose to create their corporations in this part of the world within known tax havens. It is only natural for the creators to wish to legally establish such a corporation designed specifically to manage money transfers in a place that will minimally tax such transfers.
e-Gold's creators incorporated in the Carribbean island state of St. Kitts and Nevis, and the Liberty Reserve creators incorporated in Panama (altho I truly did not know where the masterminds lived or where from they operated until now, but it seems from this article the answer is España). The entire difference between them and the pseudonymos 'Satoshi Nakamoto' is that old generation e-currency operators maintained central control of monitary transactions using their service. You managed your account by connecting to their website, logging in, and checking your funds, managing transfers, and so forth, but all of this was always under their full control. If they had any issues with your use of your own account, they had the right to shut off your access to it and confiscate all of your funds, with essentially no capability of retrival (I know of people who lost access to thousands of USD this way). They taxed every transfer you wished to make, which affected both transfers between 2 users within the same system (sending LR LR) or to exit/enter the system (exchanging LR to/from USD). They could monitor all transactions made between every user and geolocate non-anonymised users' IP addresses to log all financial activity within their system; with Bitcoin, all transactions are public to all, as opposed to only a select few being able to monitor all else who use this system to transfer money.
The most essentially incorrect aspect of confusing this story with anything to do with Bitcoin, is that Bitcoin is exciting and inspiring exactly because it is the antithesis of centralised architecture, or at least the closest successful example thereof. When we were using Liberty Reserve (or other centralised e-currency), we were completely under the creator's control. LR eventually forced upon users a captcha based in Flash that prevented us from using Tor to login securely as we could for multiple years before. When LR attacked our technical ability to use the service anonymously, many moved to Pecunix. Whilst Pecunix has a better login system (one that blatantly allows for anonymous access), it was still a centralised e-currency controlled by a single group of people operating behind a
Re:digital currencies, money exchanges (Score:2, Informative)
Most of the other digital currencies are scams and frauds. Most of them are created for the express purpose of making the creator rich. Besides, Wikipedia lists heaps, just not at the article you linked to. See https://en.wikipedia.org/wiki/List_of_digital_currencies [wikipedia.org].
Oh, and Bitcoin. Don't use LibertyReserve or another centralized system, use Bitcoin!
What took them so long? (Score:3, Informative)
For all the talk about "ZOMG the US government/New World Order/Illuminati is going to take our moneez!" in this thread, I'm surprised there's been absolutely no mention of what Liberty Reserve was often used for: the crimeware trade.
Head over to Krebs on Security [krebsonsecurity.com] for a better idea of why shutting down Liberty Reserve is a Good Thing.