Arthur Budovsky, the founder of Liberty Reserve, pleaded innocent Tuesday in Manhattan federal court
Budovsky was extradited Friday from Spain to face charges related to his alleged operation of the virtual currency that was used by cybercriminals around the world to launder the proceeds of their illegal activity. Budovsky, 40, a citizen of Costa Rica, was arrested in Spain in May 2013, as a result of an indictment filed in Manhattan federal court.
Following his extradition by Spanish authorities, Budovsky arrived in New York Friday afternoon. He was arraigned Tuesday before U.S. District Judge Denise L. Cote. She set a date for trial next year. Budovsky remains in jail.
U.S. Attorney Preet Bharara said Friday: “As alleged, Arthur Budovsky founded Liberty Reserve to enable criminals in the United States and around the world to process illegal payments and to launder billions of dollars in crime proceeds anonymously and beyond the reach of U.S. law enforcement. Budovsky allegedly operated Liberty Reserve from Costa Rica and renounced his United States citizenship to evade the authorities. Now, thanks to the cooperative efforts of our law enforcement partners here and in Spain, Arthur Budovsky has been apprehended and will face justice in an American courtroom.”
Liberty Reserve was born out of Budovsky’s unsuccessful experience running a third-party exchange service, called Gold Age, Inc., for another digital currency, called E-Gold. In 2006, Budovsky was convicted in New York State of operating Gold Age, Inc., as an unlicensed money transmitting business. In 2007, the operators of E-Gold were also charged with criminal offenses, including money laundering and operating an unlicensed money transmitting business,, and subsequently ceased doing business. In the wake of his own criminal conviction, Budovsky set about building a digital currency that would succeed in eluding law enforcement where E-Gold had failed, by, among other ways, locating the business outside the United States, the U.S. Attorney’s office said.
Budovsky emigrated to Costa Rica, where he and other defendants began operating Liberty Reserve.
Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve was created, structured, and operated to help users conduct transactions anonymously.
Liberty Reserve emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity, federal official said.