Money laundering conviction
The US government announced that one of the co-founders of Liberty Reserve, Vladimir Kats, pleaded guilty to money laundering and operating an unlicensed money transmitting business yesterday. The US government found that Liberty Reserve was one of the world’s most popular virtual currency services.
It’s co-founders were indictedÂ in the U.S. in May 2013, for allegedly laundering $6 billion in proceeds of crime in what is believed to be the largest online money laundering case in history.
The U.S. Department of Justice alleged that Liberty Reserve acted as an unlicensed global online banker for organized crime which provided a vehicle for money laundering vast sums anonymously that were difficult to trace. The DoJ says that users of the service could open an account without verification. Liberty Reserve had over 1 million users and processed 55 million transactions that allegedly resulted in the laundering of $6 billion from predicate offences which included child pornography, credit card fraud, identity theft, investment fraud, computer hacking and drug trafficking.
Forex mainstay for emerging markets
The US government says that Liberty Reserve was emerging as a leader in the world of cyberfinance – it was a leading payment channel for brokers, traders and some investors transacting in emerging markets where foreign currency restrictions prevent significant trades, such as Brazil, Nigeria, Pakistan, Argentina, and Malaysia.
Potential 85-year sentence
The US government says that its founder Kats, pleaded guilty to conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, operating an unlicensed money transmitting business, receiving child pornography and marriage fraud. He has not been sentenced but he faces a maximum of 85 years in prison – the stiffest sentence is child pornography which carries a maximum sentence of 40 years in prison.