Liberty Reserve co-founder pleads guilty to money laundering

Vladimir Kats could face up to 75 years in prison if given a maximum sentence for each charge, the DOJ said

The co-founder of Liberty Reserve, a now defunct virtual currency that was widely favored by the criminal underground, pleaded guilty on Thursday to money laundering and other charges.

Vladimir Kats, 41, also pleaded guilty in U.S. District Court for the Southern District of New York to operating and conspiring to operate an unlicensed money transmitter business, receiving child pornography and marriage fraud, according to a U.S. Department of Justice (DOJ) news release.

The Liberty Reserve virtual currency business, launched in 2006 in Costa Rica, became a financial hub of the cybercrime world, handling more than 55 million transactions worth US$6 billion over seven years, according to the indictment against Kats.

Liberty Reserve's reputation somewhat tainted the view of other virtual currencies, including Bitcoin, for their quick embrace by the criminal world. Unlike Liberty Reserve though, Bitcoin businesses and exchangers have mostly sought to comply with global financial regulations.

Prosecutors linked Liberty Reserve with laundering proceeds from credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking.

Liberty Reserve didn't validate its customers' ID -- a key requirement in many countries -- which allowed people to register under false identities. A network of third-party exchangers in Malaysia, Nigeria, Vietnam and Russia directly handled deposits and withdrawals from customers, which kept Liberty Reserve at arm's length from traditional banking systems.

Kats was arrested in May when Liberty Reserve was shut down. More than one million people used the service, including more than 200,000 in the U.S., the indictment said.

A sentencing date has not been scheduled. Kats could face up to 75 years in prison if he's given the maximum sentence for each charge, the DOJ said.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

Join the PC World newsletter!

Error: Please check your email address.

Tags CriminalsecurityUS Department of Justicelegalcybercrimefraud

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jeremy Kirk

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?