Criminals linked to Eurex bust

LAWRENCE SERETSE
Correspondent | Friday May 31, 2013 00:00

According to New York Times and BBC News reports, US Justice Department has called it the 'largest international money-laundering prosecution in history', involving approximately one million users and over 55 million illegal transactions. They reported that police raids in 17 countries, including US, Spain and Costa Rica on Friday scooped up Liberty Reserve's owners, operators and its computer hardware.

BBC reported that the case's documents allege that seven people involved in running Liberty Reserve set up the digital cash service as a 'criminal business venture' designed specifically to 'help criminals conduct illegal transactions and launder the proceeds of their crimes'.The service's operators would face charges of money laundering and operating an unlicenced money transmission system. In addition, BBC said 45 bank accounts used by the service have been seized and action has been taken to take over the assets of 35 other sites that fed funds to Liberty Reserve for laundering.

Liberty Reserve was so successful that it became a 'financial hub of the cyber crime world', whose users were involved in credit card theft, investment fraud, hacking, child pornography and drug trafficking, the reports say.US authorities dubbed the company 'a shadow banking system for criminal conduct'. Liberty Reserve's founder, Budovsky, who renounced his US citizenship in 2011 was a naturalised citizen of Costa Rica. He has been in trouble with US authorities before, having been convicted, along with Liberty Reserve co-founder Vladimir Katz, in December 2006 of operating Gold Age Inc, an unlicenced money transmitting business, reports Associated Press.The New York Times reveals that 'Liberty Reserve's origins are obscure, but it had grown into one of the criminal underworld's best-known electronic currency systems, used by hackers the world over to discreetly move large sums of money across borders,' the wire service explained.

The company 'conducted its transactions in dollars, euros and roubles' and functioned as 'an anonymous, no-questions-asked alternative to the global banking system,' according to experts.Reports say Liberty Reserve functioned through a third-party system which allowed it to avoid having to validate the identities of users, according to prosecutors. They say that while users were required to supply basic information such as name and date of birth, this was never crosschecked with official documents, or even a credit card. 'Accounts could therefore be opened using fictitious or anonymous identities,' according to the indictment, which adds: 'Liberty Reserve users routinely established accounts under false names - including such blatantly criminal monikers as 'Russia Hackers' and 'Hacker Account'.'

A Motswana woman (name known to Mmegi) who was scammed by Eurex Trade before it closed, informed this publication about the arrests.She said Liberty Reserve was the money transfer hub used to wire their investments to Eurex Trade.'When we sent our money to Eurex, we were told to use Liberty Reserve. In fact accounts were made for us upon joining the scheme. The link between Eurex and Liberty Reserve is undisputable in this situation,' she explained.The woman told Mmegi that since the criminals have been caught in the US, people like her are hopeful that they will recover their money.'If the US government has arrested these people and seized their assets we stand a chance of getting back our money,' she said.