Liberty Reserve founder's request to dismiss federal lawsuit denied

A U.S. district judge has denied an effort to dismiss a federal lawsuit filed two years ago against early digital currency firm Liberty Reserve, one of the movement’s founders.

According to court documents, Arthur Budovsky asked a judge in June to throw out the indictment on multiple grounds, questioning whether the Costa Rica-based company was required to register as a money services business and whether Bitcoin qualifies as money.

U.S. Judge Denise Cote of the Southern District of New York rejected Budovsky's motion, which would have set the stage for Budovsky to go to trial.

Budovsky was arrested in May 2013 and charged with conspiracy to launder money, operating an unlicensed money transmission business, and operating a money transmitting business without a license.

Liberty Reserve, a payments network known as LR that allows users to exchange electronic money, enabled billions of dollars in funds to be moved around the world without entrusting controls and identification protocols, the federal government said.

Other former employees of Liberty Reserve, including its co-founder and IT manager, have similar criminal charges.