Ever wondered why the creator of Bitcoin Satoshi Nakamoto kept his identity hidden for all these years? He probably suspects this will be his fate as well.
Arthur Budovsky, the founder and operator of Liberty Reserve, has been sentenced to twenty years in prison on Friday by a U.S. District Court in Manhattan. The service offered digital currencies pegged to the USD, EUR or gold that many online firms used as an alternative funding method across international borders. As the service offered anonymity for money traders the American court ruled that it was used to commit money laundering.
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According to the accusations, Liberty Reserve was processing more than $8 billion in financial transactions, making Budovsky over $25 million in earnings.These funds allegedly originated from crimes including identity theft, credit card fraud, computer hacking, child pornography and narcotics trafficking.
Unlike Bitcoin and other cryptocurrencies, Liberty Reserve was a centralized service and not a decentralized network – which allowed the authorities to bring down the service. This case demonstrates the brilliance of blockchain for enabling a non-fiat currency resilient to such an external takedown on the one side but also the harsh response of legal bodies against unorthodox financial innovators.
In early 2015 the IT manager of Liberty Reserve Maxim Chukharev was sentenced to three years in prison on charges of conspiracy to operate an unlicensed money transmitting business. 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 the computer infrastructure. Marmilev was handed a five-year sentence in December 2014 plus three years’ supervised release.