U.S. Court Sentences Man to 20 Years in Prison for Virtual Currency Money Laundering

Journalist:
May 8, 2016

A federal court has sentenced Arthur Budovsky, 42, to 20 years in prison for laundering hundreds of millions of dollars through a virtual currency called Liberty Reserve that was used by cyber criminals for laundering, according to the U.S. Justice Department. U.S. District Judge Denise L. Cote also ordered Budovsky to pay a $500,000 fine.

Budovsky pleaded guilty in January to a count of conspiring to commit money laundering. The court noted he ran an “extraordinarily successful,” large-scale international money laundering operation.

A ‘Significant Sentence’

“The significant sentence handed down today shows that money laundering through the use of virtual currencies is still money laundering, and that online crime is still crime,” said Leslie R. Caldwell, Assistant Attorney General for the Justice Department’s Criminal Division. “Together, with our American and international law enforcement partners, we will protect the public even when criminals use modern technology to break the law.”

U.S. Attorney Preet Bharara for the Southern District of New York said Budovsky ran the digital currency empire to facilitate money laundering for criminals worldwide. He said Budovsky took his operations offshore and renounced his citizenship to evade prosecution, but he has now been held to account for violating the law.

Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system” to allow people worldwide to send and receive payments using virtual currency.

Budovsky supervised Liberty Reserve’s finances, operations, and business strategy. He was aware that digital currencies were used by other online criminals, such as identity thieves and credit card traffickers.

78 Million Financial Transactions Processed

Liberty Reserve trafficked the criminal proceeds of credit card trafficking, Ponzi schemes, stolen identity information and computer hacking. The government shut it down by May 2013, when Liberty Reserve had more than 5.5 million user accounts worldwide and had processed more than 78 million financial transactions with a combined value of more than $8 billion.

U.S. users accounted for the largest segment of Liberty Reserve’s transactional volume – between $1 billion and $1.8 billion – and the most user accounts – over 600,000.

Co-defendants Mark Marmilev, Vladimir Kats, Azzeddine El Amine and Maxim Chukharev have already pleaded guilty.

Chukharev and Marmilev were sentenced to three years and five years in prison, respectively. Judge Cote is expected to sentence El Amine and Kats May 13. Charges remain pending against Liberty Reserve and two defendants who are fugitives.

Also read: Man charged with unlicensed money laundering in bitcoin-related case

Multiple Agencies Involved

The Internal Revenue Service-Criminal Investigation, the U.S. Secret Service and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations investigated the case as part of the Global Illicit Financial Team.

Featured image from Shutterstock.

Lester Coleman

Lester Coleman is a media relations consultant for the payments and automated retailing industries.