Private Digital Currency Founder Jailed for 20 Years

The founder of Liberty Reserve, a private digital currency system that was a predecessor of bitcoin, has been sentenced to 20 years in prison.

AccessTimeIconMay 9, 2016 at 8:36 p.m. UTC
Updated Sep 11, 2021 at 12:16 p.m. UTC
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The founder of Liberty Reserve, a private digital currency system shuttered by the US government for its alleged use by organized crime, has been sentenced to 20 years in prison.

Arthur Budovsky was arrested in the spring of 2013 and later extradited to the US for trial. He was ultimately charged with the operation an unlicensed money transmission business as well as conspiracy to both operate an unlicensed money services business and commit money laundering.

Budovsky pled guilty to the money laundering conspiracy charge in January after spending years trying to fight the US government’s efforts.

Prior to its shutdown in 2013, Liberty Reserve was a private money system that enabled the exchange of a digital currency called LR. The US government alleged at the time that Liberty Reserve functioned as a de facto financial hub for organized crime in the digital era.

The crackdown on the Liberty Reserve network has arguably impacted law enforcement efforts focused on bitcoin and other comparatively decentralized digital currencies. By contrast, Liberty Reserve functioned as a centralized transaction network.

In addition to the 20 years-long sentence, Budovsky was also ordered to pay a fine of $500,000.

"Despite all his efforts to evade prosecution, including taking his operations offshore and renouncing his citizenship, Budovsky has now been held to account for his brazen violations of US criminal laws," Manhattan U.S. Attorney Preet Bharara said in a statement last Friday.

Two other former Liberty Reserve employees, Vladimir Kats and Azzeddine El Amine, await sentencing, and the Justice Department says that charges remain pending against both the company itself as well as two other "fugitives".

Image via Shutterstock

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