US to prosecute 'bank of choice for the criminal underworld'

US federal prosecutors have brought charges against Liberty Reserve, a Costa Rica-based organization accused of laundering $6 billion from credit-card fraud, online Ponzi schemes and child pornography, the Wall Street Journal reported Tuesday.

The money was laundered using an internet-based currency that remained off the radar of law enforcement for years.

Liberty Reserve, founded in 2006, allegedly has "about one million users worldwide, including roughly 200,000 people in the US."

"One of the largest money-laundering operations ever uncovered," over 55 million unlawful transactions were conducted under the cover of Liberty.

For the first time ever on Tuesday, the US Patriot Act was used against a virtual currency, invoking "a section of the law to choke off Liberty Reserve from the US financial system."

The news is unlikely to please Bitcoin investors such as the Winklevoss twins, as law enforcement concerns about virtual currencies have heightened.

 

Read the story by Reed Albergotti and Jeffrey Sparshott in full.