The founder of Liberty Reserve, an underground bank widely used by criminals, has been given a 20-year prison sentence by US prosecutors.
Arthur Budovsky was accused of laundering funds by launching the online bank and US law enforcement estimates that hundreds of millions of dollars were funnelled through the service due to the use of the cryptocurrency Bitcoin.
According to the US Justice Department, Budovsky pleaded guilty to one count of money laundering, resulting in the jail term and a fine of $500,000.
The 42-year-old used to operate Liberty Reserve, an underground bank which acted as a “laundry service” for virtual currency. Such services can be commonly found in the Dark Web and are used to filter virtual currency deposits based on criminal proceeds and make virtual wallets “clean,” removing any trails linked to illegal activity.
Liberty Reserve catered for this kind of laundering but also facilitated standard Bitcoin transfers, hosting clients which included identity thieves, cybercriminals and credit card traffickers, according to a court indictment.
Prosecutors Budovsky was able to run an “extraordinarily successful” and “large-scale international money laundering operation.”
Liberty Reserve catered for over 5.5 million users worldwide with over 600,000 users alone being based in the United States. Over several years, the service processed over 78 million transactions with a combined value of over $8 billion.
After Liberty Reserve was seized and shut down by US law enforcement in 2013, Budovsky fled the US and attempted to avoid extradition by renouncing his ties to the country. However, the US Secret Service, Internal Revenue Service-Criminal Investigation, Customs and Interpol, among others, eventually tracked him down and brought him in.
“Liberty Reserve founder Arthur Budovsky ran a digital currency empire built expressly to facilitate money laundering on a massive scale for criminals around the globe,” said Manhattan US Attorney Bharara.
“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 US criminal laws.”
Four co-defendants also charged in connection to the underground bank have already pleaded guilty. Mark Marmilev and Maxim Chukharev have been given sentences of five and three years in prison respectively, and both Vladimir Kats and Azzeddine El Four cAmine are awaiting sentence. Two other suspects are on the run.
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