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Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

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Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#11

Post by pakled_engineer »

Their biggest issue (besides being a centralized service thus easy targeting) was not encrypting internal communications and allowing comments to accompany transfers which were typically "For 200 dumps of CCs" or something similarly illegal. They tried to avoid KYC regulations by just providing the internal ledger, you had to go through 3rd party exchangers in order to buy in or cash out of the system and these parties were supposed to do KYC.

Pecunix and C-gold are other centralized, closed book-entry systems still around though Pecunix changing to a voucher system.

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#12

Post by sneak »

Spooky23 wrote: post #4
ycmbntrthrwaway wrote: post #2

Why is it illegal to operate money transfer? Why founders are responsible for the crimes committed by its users? Are they guilty because the business was "unlicensed" or did they specifically promoted crime in some way?

Licensure requires compliance with various laws. Liberty Reserve was structured to not comply with any of those laws or regulations. It's like anything else. If you operating a nightclub, and there's a crowd of people selling meth in the bathroom all night, you're facilitating a crime.

Crimes require victims.

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#13

Post by atemerev »

pakled_engineer wrote: post #11

Their biggest issue (besides being a centralized service thus easy targeting) was not encrypting internal communications and allowing comments to accompany transfers which were typically "For 200 dumps of CCs" or something similarly illegal. They tried to avoid KYC regulations by just providing the internal ledger, you had to go through 3rd party exchangers in order to buy in or cash out of the system and these parti…

Well, lots of drugs are sold for cash. Cash is issued by the Fed. Can it be sued for facilitating drug crime?

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#14

Post by [deleted] »

sneak wrote: post #12
Spooky23 wrote: post #4

Earlier quoted context omitted.

Licensure requires compliance with various laws. Liberty Reserve was structured to not comply with any of those laws or regulations. It's like anything else. If you operating a nightclub, and there's a crowd of people selling meth in the bathroom all night, you're facilitating a crime.

Crimes require victims.

[deleted]

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#15

Post by chipperyman573 »

atemerev wrote: post #13
pakled_engineer wrote: post #11

Their biggest issue (besides being a centralized service thus easy targeting) was not encrypting internal communications and allowing comments to accompany transfers which were typically "For 200 dumps of CCs" or something similarly illegal. They tried to avoid KYC regulations by just providing the internal ledger, you had to go through 3rd party exchangers in order to buy in or cash out of the system and these parti…

Well, lots of drugs are sold for cash. Cash is issued by the Fed. Can it be sued for facilitating drug crime?

The feds also actively try to combat drug sales. LR made little to no efforts to do so.

I agree with what you're saying but I disagree with your example.

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#16

Post by chipperyman573 »

sneak wrote: post #12
Spooky23 wrote: post #4

Earlier quoted context omitted.

Licensure requires compliance with various laws. Liberty Reserve was structured to not comply with any of those laws or regulations. It's like anything else. If you operating a nightclub, and there's a crowd of people selling meth in the bathroom all night, you're facilitating a crime.

Crimes require victims.

1) No[0]

2) Usually money laundering means the money was obtained illegitimately. That money had to come from SOMEWHERE, and someone was probably harmed in the taking of it.

[0]: https://en.wikipedia.org/wiki/Victimless_crime

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#17

Post by wavefunction »

chipperyman573 wrote: post #15
atemerev wrote: post #13

Earlier quoted context omitted.

Well, lots of drugs are sold for cash. Cash is issued by the Fed. Can it be sued for facilitating drug crime?

The feds also actively try to combat drug sales. LR made little to no efforts to do so. I agree with what you're saying but I disagree with your example.

I think op meant the Federal Reserve, who are not involved in the War on Drugs.

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#18

Post by dragonwriter »

sneak wrote: post #12
Spooky23 wrote: post #4

Earlier quoted context omitted.

Licensure requires compliance with various laws. Liberty Reserve was structured to not comply with any of those laws or regulations. It's like anything else. If you operating a nightclub, and there's a crowd of people selling meth in the bathroom all night, you're facilitating a crime.

Crimes require victims.

Crimes require violation of criminal law, which may or may not involve a victim (the legally offended party in a crime isn't the victim, if any, but the State; that's a pretty central distinction between crimes and torts.)

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#19

Post by bdcravens »

hackerboos wrote: post #9
gamblor956 wrote: post #8

Earlier quoted context omitted.

It's not illegal to operate a money transfer business. Paypal, Venmo, Stripe, Square, etc. are all money transfer businesses. However, in the US it is illegal to operate a money transfer business without getting the proper licenses and registrations at the federal, state, and local levels. It's even more illegal to operate a money transfer business that's being used for laundering, know or be told of these laundering…

LR was based in Costa Rica.

Need to be licensed as an MSB is based on where your customers are located, not your business.

Re: Founder of Liberty Reserve Pleads Guilty to Laundering More Than $250M

#20

Post by rasengan »

This is serious stuff, and I want to mention to anybody on HN who is thinking about running a business like this given the rise in cryptocurrency related platforms, please consult a lawyer before you embark on your quest.

These are serious laws and it doesn't cost much to find out if you're in or outside of MSB regulations.

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