Liberty Reserve indicted in alleged money-laundering scheme

Liberty Reserve SA and seven individuals were indicted in what federal prosecutors in New York called an international money-laundering conspiracy.

The company, incorporated in Costa Rica in 2006, operates “one of the world’s most widely used digital currencies,” prosecutors said today. Through a website it provides users with the ability to send and receive payments globally, they said.

In fact the company was created and structured “as a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes,” according to a grand jury indictment filed by prosecutors in the office of U.S. Attorney Preet Bharara and unsealed today in U.S. District Court in Manhattan.

The company processed an estimated 55 million financial transactions and is thought to have laundered “more than $6 billion in criminal proceeds,” prosecutors said in the indictment.

Bharara said he will hold a news conference later today to describe the charges and the indictment.

Besides the company, according to the indictment, those charged were Arthur Budovsky, described as the principal founder of Liberty Reserve and the supervisor of its operations; Vladimir Kats, a co-founder who left the company in 2009 after a dispute with Budovsky; Ahmed Yassine Abdelghani, who also left in 2009; Allan Esteban Hidalgo Jimenez, manager of day-to-day operations; Azzeddine El Amine, a principal deputy to Budovsky; Mark Marmilev; and Maxim Chukharev.

The last two designed and maintained the operation’s technological infrastructure, the government alleged.

The company was started after Budovsky and Kats were convicted in New York State of operating Gold Age Inc., “an unlicensed money-transmitting business,” according to the indictment.

Budovsky, also known as Arthur Belanchuk and Eric Paltz, “set about building a digital currency that would succeed in eluding law enforcement where E-Gold had failed,” according to the indictment.

The case is U.S. v. Liberty Reserve SA, 13-cr-00368, U.S. District Court, Southern District of New York (Manhattan).

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