Dec 5, 2013
Prosecutors Use Patriot Act to Shut Down Virtual Currency Operator
Posted on May 28, 2013
Liberty Reserve, which, until Tuesday, operated a virtual currency that could be exchanged for cash, stands accused by the United States of laundering $6 billion in criminal funds.
The Treasury Department said the company was “specifically designed and frequently used to facilitate money laundering in cyber space.” According to Reuters, at least five people have been arrested in Spain, New York and Costa Rica, where the company was apparently based (Costa Rican prosecutors said the company was not operating legally).
The best known virtual currency is Bitcoin, but unlike Liberty Reserve, no central authority governs Bitcoins. Instead, users can exchange Bitcoins with each other or buy them from other entities. Currently, one Bitcoin is worth about $130.
So how does the United States have the authority to shut down a foreign-based virtual currency? According to Reuters, the Patriot Act empowers the Treasury Department to take aggressive action against accused money launderers.
—Posted by Peter Z. Scheer.
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