Indictment Returned and Domains Seized in Liberty Reserve Digital Currency Matter

May 28, 2013. The U.S. District Court (SDNY) unsealed an indictment that charges Liberty Reserve S.A. and several individuals with conspiracy (18 U.S.C. § 371) to commit money laundering (18 U.S.C. § 1956) and operating an unlicensed money transmitting business (18 U.S.C. §§ 1960 and 1962) in connection with the operation of a digital currency, a payment processor and money transfer system.

The indictment states that the defendants "intentionally created, structured, and operated LIBERTY RESERVE as a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes. The defendants deliberately attracted and maintained a customer base of criminals by making financial activity on LIBERTY RESERVE anonymous and untraceable."

The indictment continues that "LIBERTY RESERVE has emerged as one of the principal means by which cyber-criminals around the world distribute, store, and launder the proceeds of their illegal activity. Indeed, LIBERTY RESERVE has become a financial hub of the cyber-crime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking."

The indictment also seeks forfeiture of funds in enumerated accounts.

Richard Weber, Chief of the Internal Revenue Service Criminal Investigation, stated in a Department of Justice (DOJ) release that "We are now entering the cyber age of money laundering. Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity. What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world."

The indictment also seeks forfeiture of domain names listed in the indictment.

The DOJ release states that "In addition to the criminal charges brought in the indictment, five domain names were seized, namely, the domain name of Liberty Reserve and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites seeking the forfeiture of the exchangers' domain names because the websites were used to facilitate the Liberty Reserve money laundering conspiracy and constitute property involved in money laundering. The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with Liberty Reserve and were listed on Liberty Reserve’s website as ``pre-approved exchangers.´´"

The charged individuals are Arthur Budovsky, Vladmir Kats, Azzeddine El Amine, Mark Marmilev, Maxim Chukharev, Ahmed Yassine Abdelghani and Allan Esteban Hidalgo Jimenez.

This case is U.S. v. Liberty Reserve S.A., et al., U.S. District Court for the Southern District of New York, D.C. No. 13 CRIM 368.

(Published in TLJ Daily E-Mail Alert No. 2,569, June 3, 2013.)