Tuesday, May 28, 2013

US Government Seizes Assets of Another BItcoin Exchange; Firm President Arrested

The United States government has seized the assets of another Bitcoin exchange. Following in the footsteps of seizures of the US bank accounts of the Bitcoin exchange Mt Gox, the government has seized the assets of Liberty Reserve.

Costa Rica's Tico Times reports that the president of the firm, Arthur Budovsky Belanchuk, has been arrested by Costa Riacan and US authorities in Spain. Liberty Reserve is registered as a Costa Rican firm.

According to TT, Costa Rican prosecutor José Pablo González said Budovsky, a former U.S. citizen and naturalized Costa Rican of Ukrainian origin, has been under investigation since 2011 in Costa Rica for suspected money laundering using apparent shell companies he created to run Liberty Reserve.

The Costa Rican daily La Nación reported that Budovsky, a naturalized Costa Rican, renounced his U.S. citizenship last year, after the joint investigation of Liberty Reserve began.

Police raided three homes and five businesses linked to the Costa-Rica-based Liberty Reserve and seized papers and digital documents that will be turned over to US authorities, reports the UK's Guardian.

According to Bitcoin Magazine:
In 2011, Liberty Reserve, together with Dwolla, was one of the main methods of moving money into Bitcoin exchanges to buy bitcoins, and can be credited as being one of the chief enablers of the Bitcoin economy’s early growth at the time.[...] since then it has considerably decreased in importance in the Bitcoin community [...] other services, like OKPay, have grown to fill the space, and other Bitcoin exchanges have added more convenient means of buying bitcoins such as cash deposit and bank transfer.

In a statement, officials said authorities in Spain, Costa Rica and New York arrested five people on Friday and seized bank accounts and Internet domains associated with the company, Liberty Reserve.

 According to an indictment filed in U.S. District Court for the Southern District of New York, "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."

The indictment said the company had more than a million users worldwide, including at least 200,000 in the United States

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