Silk Road forums
Discussion => Security => Topic started by: ruby123 on May 28, 2013, 07:10 pm
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Feds in NY charge 7 in $6B digital currency money-laundering case; Costa Rica, Spain arrests
http://www.washingtonpost.com/business/feds-in-ny-charge-7-in-6b-digital-currency-money-laundering-case-costa-rica-spain-arrests/2013/05/28/2f1f7ca8-c79f-11e2-9cd9-3b9a22a4000a_story.html
By Associated Press, Updated: Tuesday, May 28, 2:44 PM
NEW YORK — The founder of an online currency transfer business was indicted in the United States along with six other people in a $6 billion money-laundering scheme described as “staggering” in its scope, authorities said Tuesday.
Arthur Budovsky is the founder of Liberty Reserve, a Costa Rica-based website long favored by cybercrime scammers. He was arrested in Spain on Friday. A defendant identified as Budovsky’s partner, Vladimir Kats, was in custody in New York.
Authorities say the network processed at least 55 million illegal transactions worldwide for 1 million users, including 200,000 in the United States. They call the international money-laundering case the largest ever.
“The scope of the defendants’ unlawful conduct is staggering,” said an indictment unsealed in federal court in Manhattan. In announcing the case, U.S. Attorney Preet Bharara said the network “became the bank of choice for the criminal underworld.”
Its digital currency service was designed to shield the identity of crooked users seeking to launder ill-gotten gains, he said.
“The coin of the realm was anonymity,” he said. “It was the opposite of a know-your-customer policy.”
In a statement, Costa Rica police confirmed that Budovsky had been arrested in Spain on money laundering charges and that several premises linked to his company had been raided. A notice pasted across Liberty Reserve’s website Tuesday morning said the domain “has been seized by the United States Global Illicit Financial Team.”
Attempts to reach Liberty Reserve by phone and email were not immediately successful.
Its demise is likely to send a sharp shock across the Internet.
The indictment calls the network “one of the principal means by which cyber criminals around the world distribute, store and launder proceeds of their illegal activity ... including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.”
Liberty Reserve allowed users to open accounts using fictitious names, including “Russian Hacker” and “Hacker Account.” The network charged a 1 percent fee on transactions.
Budovsky and Katz have previous convictions on charges related to an unlicensed money-transmitting business, according to court papers. After that case, the pair decided to move their operation to Costa Rica, where Budovsky officially renounced his U.S. citizenship, the papers say.
In an online chat captured by law enforcement, Katz admitted Liberty Reserve was “illegal” and noted that authorities in the United States knew it was “a money laundering operation that hackers use.”
Aditya Sood, a computer science doctoral candidate at Michigan State University who has studied the underground economy, described Liberty Reserve as a no-questions-asked alternative to the global banking system, with little more than a valid email needed to open an account and start moving money across borders.
“You don’t need to provide your full details, or personal information, or things like that,” Sood said in a telephone interview. “There’s no way to trace an account. That’s the beauty of the system.”
Budovsky and another man identified by Spanish authorities as Azzeddine el Amine were arrested Friday at Madrid’s Barajas airport while trying to catch a connecting flight from Morocco to Costa Rica, according to a Spanish National Court official, who spoke on condition of anonymity because court policy forbids him from speaking on the record.
Both men have indicated they will fight any move to send them to the U.S., the official said. The pair were ordered to remain in prison pending an extradition hearing.
Authorities described Liberty Reserve as being rife with criminals, but the site’s ease of use, low fees and irreversible transactions that deterred fraud also attracted a thriving community of legitimate tech-savvy users in countries with limited access to credit cards.
Mitchell Rossetti, whose Houston, Texas-based ePayCards.com was one of several mainstream merchants that accepted the online-only currency, said his business still had about $28,000 tied up in Liberty Reserve accounts.
“The irony of this is I went to them because of the security,” Rossetti said. “All sales were final.”
He acknowledged that the currency was being used by scammers, but said Liberty Reserve was just like any other currency. “The U.S. dollar can be donated to a church or it can pay a prostitute,” he said.
Liberty Reserve appears to have played an important role in laundering the proceeds from the recent theft of some $45 million from two Middle Eastern banks, according to legal documents made public by U.S. authorities earlier this month.
The complaint against one of the Dominican Republic gang members allegedly involved in the theft states that thousands of dollars’ worth of stolen cash was deposited into two Liberty Reserve accounts via currency centers based in Siberia and Singapore.
A total of 14 premises were raised in Panama, Switzerland, the U.S., Sweden, and Costa Rica, according to Spanish authorities. In Costa Rica, investigators recovered five luxury cars, including three Rolls Royces, Spanish police said. Bharara, the federal prosecutor, said authorities had seized Liberty’s computer servers in Costa Rica and Switzerland.
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Satter reported from London. Alan Clendenning and Jorge Sainz in Madrid contributed to this report.
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We've been talking about this. This is the same thing that happened to Liberty Dollar and egold. History repeating itself.
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All those people are going to move to bitcoin.
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Do you all think that a person that had a small transaction there is going to be in any danger? I'm talking about less than $100, one time.
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Do you all think that a person that had a small transaction there is going to be in any danger? I'm talking about less than $100, one time.
Lmao, no. Just like everyone with egold accounts. They lost the money in them.
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All those people are going to move to bitcoin.
Then the feds will come after BTC which theyre basically already doing.
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All those people are going to move to bitcoin.
Then the feds will come after BTC which theyre basically already doing.
Which is why it is decentralized. If Liberty Reserve was decentralized and we didn't know who created it then they couldn't have done this. ::)
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Fuck the fucking bankers. Fuck the fucking government. And fuck the fucking dollar. >:(
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All those people are going to move to bitcoin.
I came to the same conclusion...I bet Bitcoin prices start climbing to around $200.00 within the near future.
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$200 is a low bet, in my opinion.
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$200 is a low bet, in my opinion.
If you truly understand bitcoin then you understand that it will reach over $1,000 in time as long as no other crypto-currency takes its place. Shit, you guys are talking about the past. We hit $266 weeks ago, of course we will again. I hope that you realize that all 21 million coins will not be mined in your lifetime. The more people use bitconis, which they will, the higher the value will go up. It's not printed out of air like fiat and there is a small market cap.
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...
Which is why it is decentralized. If Liberty Reserve was decentralized and we didn't know who created it then they couldn't have done this. ::)
Completely agree.
There is a lesson here for future e-currencies: Decentralise, or die.
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Yeah just saw this on CNN. Looks like that inevitable clash between Fed, CIA, and the Government againest the people that believe in free will is going to happen sooner than later. It's really a shame though. In LA there's a guy who invented a Bitcoin ATM and says he won't even think about putting it into effect as he would then be labeled a money transmitter. It seems that's the loophole that kinda sets off the whole investigations. I think it would be worthwhile to come up with alternative means of digital currency just in case however the Governments stance on the idea of a money transmitter and the way they describe it gives them so much room to do what they want. According to their interpretation everyone in this country are money transmitters then and should be arrested.
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$200 is a low bet, in my opinion.
I hope that you realize that all 21 million coins will not be mined in your lifetime.
I guess that really depends on how old you are. I read an interesting article today about how bitcoin mining is progressing so fast that the last block will be mined up 50+ years ahead of schedule. Its an interesting read, I'll link for anyone interested.
http://www.thegenesisblock.com/at-this-rate-the-last-new-btc-will-be-issued-55-years-ahead-of-schedule/
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$200 is a low bet, in my opinion.
I hope that you realize that all 21 million coins will not be mined in your lifetime.
I guess that really depends on how old you are. I read an interesting article today about how bitcoin mining is progressing so fast that the last block will be mined up 50+ years ahead of schedule. Its an interesting read, I'll link for anyone interested.
http://www.thegenesisblock.com/at-this-rate-the-last-new-btc-will-be-issued-55-years-ahead-of-schedule/
Can't happen until after year 2100 for sure. Yes it progressing with ASICs but it keeps getting more difficult. The difficulty keeps doubling. I read a paper about this awhile ago and it clearly said all the coins wont be mined until after 2100. I believe it. O0
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Did you read the article? Here's some comments from reddit which might be interesting to read also.
http://www.reddit.com/r/Bitcoin/comments/1f7e8l/at_this_rate_the_last_new_btc_will_be_issued_15/
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I guess that really depends on how old you are. I read an interesting article today about how bitcoin mining is progressing so fast that the last block will be mined up 50+ years ahead of schedule. Its an interesting read, I'll link for anyone interested.
http://www.thegenesisblock.com/at-this-rate-the-last-new-btc-will-be-issued-55-years-ahead-of-schedule/
They need to adjust the difficulty more. Look at the hashrate over the last year, it exploded in the last few months:
https://blockchain.info/charts/hash-rate
BTW, if you ever needed incontrovertible evidence that hashrate has no influence on the price of BTC, compare that graph to this one:
https://blockchain.info/charts/market-price
There's no correlation. I wish the market price was increasing as steadily has the hashrate.
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Did you read the article? Here's some comments from reddit which might be interesting to read also.
http://www.reddit.com/r/Bitcoin/comments/1f7e8l/at_this_rate_the_last_new_btc_will_be_issued_15/
Interesting. Only time will tell.
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There's no correlation.
I'm not sure if I missed the sarcasm, but I do think there is /some/ correlation, especially when you compare the all-time graphs of both.