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Liberty Reserve Deputy Pleads Guilty to Money Laundering

Regulators claim the virtual currency business acted as a bank for the global criminal underworld.

Azzedine El Amine, a former deputy to the founder of Liberty Reserve, the large digital currency operation that was shut down last year by regulators, pleaded guilty in Manhattan court last Thursday to charges of money laundering, according to a statement from the Department of Justice. El Amine was one of six individuals indicted by regulators for money laundering and operating an illegal money transmitter in May 2013 when Liberty Reserve was shut down.

[For more of our coverage on virtual currencies, check out: Why Bitcoin Won't Die.]

Regulators claim that Liberty Reserve “served as the bank of choice for the criminal underworld,” as its virtual currency service provided anonymity for users to conduct transactions that could not be traced back to them. Liberty Reserve had more than 1 million users and processed nearly 55 million transactions before it was shut down, and nearly all of that activity was tied to criminals, according to the Department of Justice. The department accused the operation (which was incorporated in Costa Rica in 2006) of laundering more than $6 billion of illegal money obtained through drug trafficking, fraud, and other crimes.

El Amine, who pled guilty to operating an illegal money transmitter in addition to the money laundering charges, is not the first Liberty Reserve official to plead guilty to such charges. One of Liberty Reserve’s co-founders, Vladimir Kats, pled guilty late last year to the same indictment.

The law enforcement operation to take down Liberty Reserve included agencies from 17 different countries, demonstrating an interest from regulators across different geographies to root out illegal activity associated with anonymous virtual currency operations. Most recently, the New York State Department of Financial Services proposed new rules for virtual currency businesses operating within the state, and the Consumer Financial Protection Bureau issued an advisory to consumers on the risks of using and trading in virtual currencies.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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