Liberty Reserve founder pleads guilty to laundering $250M
Back in May 2015, a joint-operation between US, Spanish and Costa Rican authorities saw Liberty Reserve shut down for money laundering.
At the time, Liberty Reserve was the payment processor of choice for much of the MLM underbelly. Providing a platform for relatively anonymous money laundering, Liberty Reserve was also widely popular with criminals outside of MLM too.
Five months after the shutdown, Liberty Reserve co-founder Vladmir Kats plead guilty to money laundering.
A year later his partner in crime, fellow Liberty Reserve co-founder Arthur Budovsky Belanchuk, was extradited to the US.
There Belanchuk faced criminal charges for his role in Liberty Reserve, identified by then as a $6 billion dollar money laundering racket.
Belanchuk filed a Motion to Dismiss the case, which was denied last September.
A trial had been scheduled to kick off in early February 2015, however a few hours ago news broke that Belanchuk has now plead guilty.
The plea sees Belanchuk agree with the DOJ’s frank assessment of Liberty Reserve and his role therein.
Budovsky specifically designed Liberty Reserve, which billed itself as the Internet’s “largest payment processor and money transfer system,” to help users conduct anonymous and untraceable illegal transactions and launder the proceeds of their crimes.
From its inception in or about 2006, Budovsky directed and supervised Liberty Reserve’s operations, finances and business strategy.
To grow the business and evade the scrutiny and reach of U.S. law enforcement, Budovsky emigrated to Costa Rica, where he and other defendants began operating Liberty Reserve, and in 2011, Budovsky renounced his U.S. citizenship and became a Costa Rican citizen.
Budovsky told U.S. immigration authorities that his company was developing a software that “might open him up to liability in the U.S.”
Liberty Reserve became one of the principal money-transmitting services used by cybercriminals around the world to amass, distribute, store and launder the proceeds of their illegal activity, including proceeds of investment fraud, credit card fraud, identity theft and computer hacking.
Before the U.S. government shut down Liberty Reserve in May 2013, it had more than 5 million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and had processed millions of transactions.
Budovsky admitted in his plea agreement to laundering more than $250 million in criminal proceeds.
U.S. Attorney Preet Bharara of the Southern District of New York quipped;
Arthur Budovsky founded and operated Liberty Reserve, an underworld cyber-banking system that laundered hundreds of millions of dollars in illicit proceeds for criminals around the world.
The only liberty that Budovsky and Liberty Reserve promoted was the freedom to commit and profit from crime.
Thanks to this truly global investigation that included cooperation from 17 countries, Liberty Reserve has been shut down, and its founder Arthur Budovsky stands convicted in an American court of law, facing the loss of his own liberty.
So endeth the tale of one of the MLM underbelly’s most notorious payment processors, the founder of which will now likely be handed down a lengthy jail term.
Belanchuk is scheduled to be sentenced on May 5th.
Update 7th May 2016 – On May 5th a New York District court sentenced Arthur Budovski Belanchuk to 20 years in prison.