Liberty Reserve, a digital currency company that has become one of the most popular forms of online payment for Forex traders has been shut down after U.S. and Costa Rican authorities arrested founder Arthur Budovsky Belanchuk. Budovsky, 39 was detained in Spain as part of a money laundering investigation jointly run by authorities in New York and Costa Rica.
As reported separately in The Tico Times and La Nacion, two Costa Rican daily newspapers, the police action resulted in an ongoing three-day outage at libertyreserve.com. According to investigators Liberty Reserve as well as several other businesses run by Budovsky, was used to launder funds for drug trafficking and child pornography websites.
Liberty Reserve has been providing mostly unregulated payment processing services for U.S. dollars and euros for several years and was known for being one of the first stops for brokers to quickly convert U.S. dollars to Bitcoins and vice versa. Considering that bitcoins are as-of-yet unregulated, it isn't surprising that Liberty Reserve has been a leader in the trading of this nouveau currency.
For years, Liberty Reserve was the only payment option available for many Forex brokers, but over the last few years, many new processing companies have stepped in to conduct the same transactions and Liberty Reserve has lost a lot of business, though it had, until yesterday, remained a relative frontrunner in the online money transfer business.
According to Venture Beat, Arthur Budovsky has been in trouble with the law several times. In 2006, Budovsky and his partner Vladimir Kats, were indicted in the United States on charges related to dealings with their business GoldAge, which allegedly transmitted close to $30 million to digital currency accounts illegally. Both were sentenced to five years in prison in 2007 but served probation only. Budovsky then absconded from the United States and headed to Costa Rica, where he later started Liberty Reserve.
Have you used Liberty Reserve? What did you think?