Silk Road forums
Discussion => Newbie discussion => Topic started by: Amish Mafia on June 03, 2013, 02:58 pm
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Shut down by those trying to close BTC.
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http://www.nytimes.com/2013/05/29/nyregion/liberty-reserve-operators-accused-of-money-laundering.html?pagewanted=all&_r=0
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'those trying to close BTC'?
Care to elaborate?
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Online Currency Exchange Accused of Laundering $6 Billion
By MARC SANTORA, WILLIAM K. RASHBAUM and NICOLE PERLROTH
Published: May 28, 2013
The operators of a global currency exchange ran a $6 billion money-laundering operation online, a central hub for criminals trafficking in everything from stolen identities to child pornography, federal prosecutors in New York said on Tuesday.
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Robert Stolarik for The New York Times
“The coin of its realm was anonymity,” Preet Bharara, the United States attorney in Manhattan, said of Liberty Reserve.
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How Liberty Reserve’s Virtual Currency Works
DOCUMENT: Indictment of Liberty Reserve S.A. on Charges of Money Laundering
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Bits Blog: Unlike Liberty Reserve, Bitcoin Is Not Anonymous — Yet (May 29, 2013)
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The currency exchange, Liberty Reserve, operated beyond the traditional confines of United States and international banking regulations in what prosecutors called a shadowy netherworld of cyberfinance. It traded in virtual currency and provided the kind of anonymous and easily accessible banking infrastructure increasingly sought by criminal networks, law enforcement officials said.
The charges announced at a news conference by Preet Bharara, the United States attorney in Manhattan, and other law enforcement officials, mark what officials said was believed to be the largest online money-laundering case in history. Over seven years, Liberty Reserve was responsible for laundering billions of dollars, conducting 55 million transactions that involved millions of customers around the world, including about 200,000 in the United States, according to prosecutors.
Richard Weber, who heads the Internal Revenue Service’s criminal investigation division in Washington, said at the news conference that the case heralds the arrival of “the cyber age of money laundering,” in which criminals “are gravitating toward digital currency alternatives as a means to move, conceal and enjoy their ill-gotten gains.”
“If Al Capone were alive today, this is how he would be hiding his money,” Mr. Weber said. “Our efforts today shatter the belief among high-tech money launderers that what happens in cyberspace stays in cyberspace.”
Just as PayPal revolutionized how people shop online, making it possible to buy a microwave oven or concert tickets with the click of a button, Liberty Reserve sought to create a similarly convenient way for criminals to make financial transactions, law enforcement officials said.
The charges detailed a complicated system designed to allow people to move sums large and small around the world with virtual anonymity, according to an indictment, which was unsealed in federal court in Manhattan.
“As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes — the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers and traffickers,” Mr. Bharara said at the news conference, where officials from the Justice and Treasury Departments, as well as the Secret Service and Homeland Security Investigations, also spoke. “The global enforcement action we announce today is an important step toward reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”
Liberty Reserve surfaced as a preferred vehicle to transfer money between parties in a number of recent high-profile cybercrimes, including the indictment of eight New Yorkers accused of helping to loot $45 million from bank machines in 27 countries, officials said.
Liberty Reserve was incorporated in Costa Rica in 2006 by Arthur Budovsky, who renounced his United States citizenship in 2011, and was arrested in Spain on Friday. He was among seven people charged in the case; five of them were under arrest, while two remained at large in Costa Rica. All were charged with conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and operating an unlicensed money-transmitting business. The money laundering count carries a maximum sentence of 20 years in prison, and the other two charges carry a maximum of 5 years each.
In addition to the criminal charges, five domain names were seized, including the one used by Liberty Reserve. Officials also seized or restricted the activity of 45 bank accounts.
The closing of Liberty Reserve last week seemed to have an immediate chilling effect on its customers, who were suddenly unable to access their funds and who posted anxious comments in underground forums, according to law enforcement officials. Mr. Bharara said the exchange’s clientele was largely made up of criminals, but he invited any legitimate users to contact his office to get their money back.
The charges outlined how the money transfer system operated, offering a glimpse into the murky world of online financial transactions where money bounces between accounts from Cyprus to New York in the blink of an eye.
To transfer money using Liberty Reserve, a user needed only to provide a name, address and date of birth. But users were not required to validate their identity.
“Accounts could therefore be opened easily using fictitious or anonymous identities,” the indictment states. Prosecutors cited “blatantly criminal monikers” used by Liberty Reserve clients, like “Russia Hackers.”
Essentially, all a customer needed to open an account was an e-mail address.
One undercover agent was able to register accounts under names like “Joe Bogus” and describe the purpose of the account as “for cocaine” without being questioned, officials said. That no-questions-asked verification system made Liberty Reserve the premier bank for cybercriminals, prosecutors said.
The case is significant, prosecutors said, because it attacks the financial infrastructure used by many cybercriminals in much the same way that drug-money-laundering prosecutions unravel the financial underpinnings of the narcotics trade.
Dismantling the Liberty Reserve operation was “critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection,” said James T. Hayes Jr., the special-agent-in-charge for Immigration and Customs Enforcement Homeland Security Investigations.
While Liberty Reserve was incorporated outside the United States, federal officials used a provision in the Patriot Act to target the organization and other financial institutions with whom they conducted business. It was the first time the provision had been used to prosecute a virtual currency provider, officials said.
Liberty Reserve did not take or make cash payments directly and instead used “third-party ‘exchangers,’ ” according to the indictment. These exchangers would take and make payments, and then credit or debit the Liberty Reserve account, allowing Liberty Reserve to avoid collecting any banking information on its clients and not leave a “centralized financial paper trail,” the indictment said.
The exchangers, the indictment said, “tended to be unlicensed money-transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam.”
The people who accepted Liberty Reserve’s currency were “overwhelmingly criminal in nature,” according to the indictment.
“They included, for example: traffickers of stolen credit card data and personal identity information; peddlers of various types of online Ponzi and get-rich-quick schemes; computer hackers for hire; unregulated gambling enterprises; and underground drug-dealing Web sites,” according to the indictment.
Despite the case against Liberty Reserve, security experts said, there were plenty of online payment systems that allow users to move money without verifying their identities.
“Organized crime and terrorist groups are now financing their operations through these anonymous payment systems,” said Tom Kellermann, a vice president at Trend Micro, a security firm. “The financial sector no longer has a monopoly on moving capital around the world.”
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Google news
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
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Ya, heard this few days back..R.I.P
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
Means you can't rinse your BTC through LR swaps and it means that digital currency exchanges are now officially liable for the shit that goes on within their digital walls and thus Gox implementing their compliance regulations.
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I wonder if some part of all the biz of carders and hackers that was made with LR will take place with BTC fron now on...
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
Absolutely nothing. :) Liberty Reserve was a centralised virtual currency issued by the Liberty Reserve company (not unlike a bank would issue Euros and Dollars). Bitcoin is a de-centralised, Peer to Peer currency 'issued' by solving complex mathematical algorithms using computing power to do so (mining) and it cannot be shut down by any authority.
The entire Bitcoin economy can function on one single Bitcoin due to its divisibility, so even if governments at some point in the future were to buy up all 21,000,000 bitcoins that will ever exist, as long as there is one person that retains possession of a single Bitcoin that refuses to sell, they can split that Bitcoin up (and it will now be worth billions / possibly trillions in a fiat-currency sense due to the government buying up every other Bitcoin) and the Bitcoin economy will continue functioning in milli-bitcoins (mBTC) or micro-bitcoins (μBTC).
From the Bitcoin Wiki:
One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.
The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.
As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller units, such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).
So again, nothing to worry about at all! :)
Libertas
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
Means you can't rinse your BTC through LR swaps and it means that digital currency exchanges are now officially liable for the shit that goes on within their digital walls and thus Gox implementing their compliance regulations.
Lim's correct there (as he well knows! :P) but any vendor using their real information on an exchange for cashing out purposes is being incredibly foolish indeed.
Libertas
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
Means you can't rinse your BTC through LR swaps and it means that digital currency exchanges are now officially liable for the shit that goes on within their digital walls and thus Gox implementing their compliance regulations.
Lim's correct there (as he well knows! :P) but any vendor using their real information on an exchange for cashing out purposes is being incredibly foolish indeed.
Libertas
I am always correct, even if I am not correct I am correct. :)
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
Absolutely nothing. :) Liberty Reserve was a centralised virtual currency issued by the Liberty Reserve company (not unlike a bank would issue Euros and Dollars). Bitcoin is a de-centralised, Peer to Peer currency 'issued' by solving complex mathematical algorithms using computing power to do so (mining) and it cannot be shut down by any authority.
The entire Bitcoin economy can function on one single Bitcoin due to its divisibility, so even if governments at some point in the future were to buy up all 21,000,000 bitcoins that will ever exist, as long as there is one person that retains possession of a single Bitcoin that refuses to sell, they can split that Bitcoin up (and it will now be worth billions / possibly trillions in a fiat-currency sense due to the government buying up every other Bitcoin) and the Bitcoin economy will continue functioning in milli-bitcoins (mBTC) or micro-bitcoins (μBTC).
From the Bitcoin Wiki:
One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.
The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.
As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller units, such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).
So again, nothing to worry about at all! :)
Libertas
If one bitcoin is being divided and the holder of the the other 20,999 btc start selling their bitcoins or fraction of a bitcoin it will destabilize bitcoins to the point where it is not useful as a currency.
Someone could easily shut down SR from losses on the hedge.
iF SOME
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Anyone in the know wanna weigh-in on what this might mean for the future of our little world here on the SR?
Absolutely nothing. :) Liberty Reserve was a centralised virtual currency issued by the Liberty Reserve company (not unlike a bank would issue Euros and Dollars). Bitcoin is a de-centralised, Peer to Peer currency 'issued' by solving complex mathematical algorithms using computing power to do so (mining) and it cannot be shut down by any authority.
The entire Bitcoin economy can function on one single Bitcoin due to its divisibility, so even if governments at some point in the future were to buy up all 21,000,000 bitcoins that will ever exist, as long as there is one person that retains possession of a single Bitcoin that refuses to sell, they can split that Bitcoin up (and it will now be worth billions / possibly trillions in a fiat-currency sense due to the government buying up every other Bitcoin) and the Bitcoin economy will continue functioning in milli-bitcoins (mBTC) or micro-bitcoins (μBTC).
From the Bitcoin Wiki:
One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.
The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.
As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller units, such as milli-bitcoins (mBTC) or micro-bitcoins (μBTC).
So again, nothing to worry about at all! :)
Libertas
If one bitcoin is being divided and the holder of the the other 20,999 btc start selling their bitcoins or fraction of a bitcoin it will destabilize bitcoins to the point where it is not useful as a currency.
Someone could easily shut down SR from losses on the hedge.
iF SOME
The hypothetical situation that I brought up and the hypothetical situation that you brought up are really rather pointless though, due to to the fact that government will never be able to buy up 20,999,999 bitcoins - even if they tried, they would make multi-millionaires and multi-billionaires out of the people they are buying Bitcoin from once the supply falls due to their massive demand.
As we all know, money moves markets and controls government, so due to the massive amounts of wealth they've handed out to millions of people around the world they will be in a very bad financial position themselves, and will have empowered the very people they're trying to stop - libertarians, agorists and free-thinkers - by making them some of the wealthiest people in the world, guaranteeing the destruction of government in the process.
Libertas
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Buying Liberty Reserve was a real pain in the ass. I used an exchanger that required verification, then charged a minimum £15 or 3% of your order. This was how you bought weed on Budmail. But they got dumped for my new lover, SR.