Liberty Reserve co-founder pleads guilty to money laundering

Vladimir Kats allegedly laundered more than $6 billion in suspected proceeds of crimes

A co-founder of the now defunct digital current services company, Liberty Reserve, pleaded guilty in federal court to money laundering and operating an unlicensed money transmitting business.

Vladimir Kats, 41, of Brooklyn, N.Y., pleaded guilty today to laundering more than $6 billion in suspected proceeds of crimes. The charges stem from his role in running Liberty Reserve, a company that operated one of the world’s most widely used digital currency services.

By his own admission, Kats helped create and operate an anonymous digital currency system that provided cybercriminals and others with the means to launder criminal proceeds on an unprecedented scale, according to Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

“His conviction reinforces what we said when Liberty Reserve was first brought down: banking systems that allow criminals to conduct illegal transactions anonymously will not be allowed to stand, and professional money launderers will be brought to justice,” Raman said in a statement.

U.S. Attorney Preet Bharara of the Southern District of New York said that Kats’ guilty plea is a “significant step toward punishing those responsible for creating and running this international den of cybercrime.”

According to court records, Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve allegedly was created and structured, and operated, to help users conduct illegal transactions anonymously and launder the proceeds of their crimes.

Before being shut down by the government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system and allegedly laundered more than $6 billion in suspected proceeds of crimes, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking, according to the indictment.

Kats co-founded Liberty Reserve and helped operate the company until in or about 2009. A sentencing date has not yet been scheduled. Charges against Kats’ co-defendants remain pending, according to the Justice Department.

 

For more financial fraud cases, check out InsideCounsel’s coverage below:

Caesars Entertainment faces money-laundering probe

Litigation: Dealing with financial fraud

Casinos face new money-laundering, compliance rules

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Erin E. Harrison

Erin E. Harrison is the Editor in Chief of InsideCounsel magazine. Harrison’s diverse professional background includes extensive expertise in both print and online media, highlighted...

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