Creator of world’s first digital currency gets 20 years in prison

World’s first digital currency creator found guilty of money laundering charges, gets 20 years in prison

Long before Bitcoin came into existence, there was this virtual currency called Liberty Reserve. Liberty Reserve was a Costa Rica-based centralized digital currency service that billed itself as the “oldest, safest and most popular payment processor… serving millions all around a world”.

42 year old Arthur Budovsky, its creator first started the digital currency service in 2006 from Costa Rica. However it fell foul with US authorities and the Liberty Reserve creator was arrested. In a ruling yesterday, a US judge sentenced Budovsky to 20 years.

The U.S. government contended that the whole thing was just a massive, $6 billion money laundering operation. On Friday, U.S. District Judge Denise L. Cote sentenced him to two decades in federal prison. She said Budovsky did not show “genuine remorse,” according to the Department of Justice.

For seven years starting in 2006, anyone could use Liberty Reserve to transfer money to any place they wanted. All the site required was someone’s name, e-mail address, and birthday. Normally, banks have stricter standards to avoid funneling criminal funds.

US authorities said that Liberty Reserve was a money laundering website and a favourite haunt for stashing cash by credit card traffickers and identity thieves. At its height, according to a federal indictment, Liberty Reserve had more than 1 million customers worldwide, including 200,000 in the United States. It handled 12 million financial transactions a year.

Liberty Reserve caught the eyes of US authorities in the worldwide sweep against money launderers and terrorists after 9/11. After identifying the website for doing illegitimate payment processing, US administration used the newly formed Patriot Act to act against it.

In 2013, American investigators took over the website and shut it down. In 2014, Budovsky and several coworkers were arrested in Spain. Then Budovsky was extradited to the United States to face trial for money laundering and operating an unlicensed money transmitting business. Subsequently, during trial, Budovsky pleaded guilty to money laundering and admitted to secretly moving at least $122 million.

“Despite all his efforts to evade prosecution, including taking his operations offshore and renouncing his citizenship, Budovsky has now been held to account for his brazen violations of U.S. criminal laws,” Manhattan U.S. Attorney Preet Bharara said in a statement.

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