Founder of private digital currency service Liberty Reserve sentenced to 20 years in prison

Liberty Reserve is a Costa Rican-based digital currency service that bills itself as "the oldest, most secure and most popular payment processor... serving millions of users around the world". The site had over 1 million users at its end.

In May 2013, Liberty Reserve was shut down by U.S. federal prosecutors under the Patriot Act after being investigated by authorities in 17 countries. Liberty Reserve founder Arthur Budovsky and six others were charged by the U.S. with money laundering and operating an unlicensed financial trading company. Liberty Reserve transferred about $6 billion in its history. According to prosecutors, the Liberty Reserve case "may be the largest international money laundering case in U.S. history," and the private digital currency system was shut down by the U.S. government because it was suspected of being used by criminal organizations.

It is reported that Budovsky was arrested in the spring of 2013 and was later extradited to the United States for trial. Recently, Budovsky has been sentenced to 20 years in prison.

Liberty Reserve was a private monetary system that enabled transactions in a digital currency called LR before it ceased service in 2013. The U.S. government accused Liberty Reserve of acting as a financial hub for a digital-age criminal organization.

And the crackdown on the Liberty Reserve network, which acts as a centralized exchange network, certainly has implications for law enforcement against Bitcoin and other relatively decentralized digital currencies.

In addition to the 20-year sentence, Budovsky was ordered to pay a $500,000 fine.

“Despite his every effort to evade prosecution, including renouncing his citizenship and operating the system offshore, Budovsky has now been held accountable for violating U.S. criminal law,” U.S. Attorney Preet Bharara of Manhattan said in a statement on Friday.

Two other former Liberty Reserve employees, Vladimir Kats and Azzeddine El Amine, are awaiting sentencing, and the Justice Department said the trial of the company and two other "fugitives" remains pending.