Concerns have been raised by legitimate users of Liberty Reserve following the digital cash exchange’s shutdown by US authorities. With some $25 million seized by authorities, users not involved in criminal activity are worried they will not see their funds returned.
The Costa Rican-based payment processor, which allowed users to open accounts and transfer funds anonymously, is accused by the U.S. Department of Justice of helping “criminals conduct illegal transactions and launder the proceeds of their crimes.” The anonymity of the service, combined with lax regulation demonstrated by user account names like “Russia Hackers” and “tostealyourmoney,” made Liberty Reserve popular among fraudsters, identity thieves, hackers, and other criminals.
The company had about a million users and operated for seven years, handling six billion dollars, making this “the largest international money-laundering prosecution in history.”
The takedown is not the first time the company comes under suspicion. Liberty Reserve was denied a license by Costa Rica’s financial regulator in 2011 and subsequently closed, but continued to operate through several other companies.
According to Troels Oerting, who heads Europol’s European Cybercrime Center, the shutdown of the company is “a stiff blow” to cybercriminals, but “the criminals will adapt and there will be other services like this.”
Unfortunately, the shutdown has also been a stiff blow to legitimate users. Mitchell Rossetti, whose law-abiding EPay Tarjeta service used Liberty Reserve, complains that users not involved in criminal activities are being treated as “collateral damage,” becoming “victims through the closure and seizure of LR.”
Whether and when funds will be returned to legitimate users is not clear.
The takedown of Liberty Reserve does not mean that all online payment processors are unsafe. There are numerous legitimate (though more expensive) companies offering digital cash exchange, including www.moneybookers.com, www.allcharge.com, www.nextpay.com, www.instabill.com, www.ok4pay.com, www.globalpayltd.com, and www.instabill.com.