Former IT manager of now shuttered Liberty Reserve Maxim Chukharev has been sentenced to three years in prison on charges of conspiracy to operate an unlicensed money transmitting business. He pleaded guilty last September.
The US Justice Department said that he worked with the company’s former chief technology officer, Mark Marmilev, at Liberty Reserve in Costa Rica to maintain computer infrastructure. Marmilev was handed a five-year sentence in December plus three years’ supervised release, but is appealing the sentence.
Liberty Reserve used its own system of digital currency, “Liberty Reserve dollars/euros,” to facilitate as many as 55 million illegal transactions worth as much as $6 billion. After a multi-year investigation by authorities in 17 countries, the “black market bank” was shuttered in 2013 and several of its operators were arrested. Chukharev was the fourth to plead guilty.
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Prosecutors alleged that Chukharev designed Liberty Reserve’s infrastructure such that it seemed like the site enforced anti-money laundering controls.
“By evading U.S. licensing requirements, Liberty Reserve allowed cybercriminals to move money anonymously around the world,” said Preet Bharara, US Attorney.
The site’s alleged principal founder, Arthur Budovsky, faces up to 30 years in prison if convicted for money laundering and unlicensed money transmission charges. He has pleaded not guilty.
Participants in the case will most likely be keeping a close eye on the ongoing Silk Road trial. While the contested issue in the latter has boiled down to the extent of Ulbricht’s involvement in the site, the case can set precedents in how courts view online marketplaces as middlemen and the relevance of digital currencies.