10 ms·

Liberty Reserve Founder Arrested, Site Shuttered

113 points by samweinberg 13y ago

rdl 13y ago
E-Gold round 47, I guess? It's unclear how predictive the raid on Mt Gox (which appears to be FinCEN MSB registration related, but possibly with more behind it) and LR (which appears to be due to the use of LR by child porn and other illegal activities, ultimately) are for future USG vs. Bitcoin exchangers and other market participants. (also, sigh, he's getting DoSed; using Prolexic, who are usually pretty decent at mitigating these attacks, but it takes a long time to load.)
deleted 13y ago
[deleted]
dariusm5 13y ago
Cached version: http://webcache.googleusercontent.com/search?q=cache:krebsonsecurity.com/2013/05/reports-liberty-reserve-founder-arrested-site-shuttered/ http://webcache.googleusercontent.com/search?q=cache:krebson...
hackerboos 13y ago
I'm surprised they managed to skirt the law for so long when they actively promoted very shady HYIP programs.
- jtome 13y ago
  Costa Rica has some wacky banking laws which allowed this to go on for as long as it did
DanielBMarkham 13y ago
My opinion on e-currency is evolving the more I see how it's actually working in the real world. Ignoring the fact that bad people many times use e-currency for repulsive things like child slavery, the lesson over the past month or two seems very clear: any form of e-currency is a huge tool for governments to monitor and control economic activity. We think of e-currency as being much easier to move around than printed currency, but it's actually much easier to track and control than printed currency. Yes, it begins as an anonymous and cryptographically-secure form of value representation, but once government adds just a little enforcement tweaking (many times without even having to pass a law) it becomes a big lead weight around the owner's neck. Best-case, it's all tracked down to the penny. Worst-case, you lose all your value. I remain a skeptical fan, though. Here's hoping the community works through these issues.
- gbrindisi 13y ago
  > Ignoring the fact that bad people many times use e-currency for repulsive things like child slavery Source?
  - rdl 13y ago
    E-Gold got used for carders (a lot), HYIPs/moneygames, and, most regrettably, child pornography (this is all in court documents; I consulted for E-Gold and worked on an affiliated project back in 1998-1999, about a decade before the prosecution). It was funny running into Carol Van Cleef, a lawyer from Patton Boggs, who defended E-Gold after they were convicted (in implementing the agreement), at the Bitcoin 2013 conference (she knew my name from docs, but we'd never met). E-Gold actually was helping prosecutors vs. the carders/cp people, and maintaining files on them/actively working with law enforcement, but when it became a criminal case about E-Gold, that information was used as evidence the system itself supported these activities. LR is probably in the same position; I know they have essentially the same market positioning.
  - the_mitsuhiko 13y ago
    You don't even need a source for this, it should be obvious that it's used for that.
    - shocks 13y ago
      You mean exactly the same way that pound sterling and dollar are used for illegal things too?
      - lmm 13y ago
        I understood that large criminal transactions were generally done in CHF - larger-denomination notes available, and it avoids currency conversion costs when you're withdrawing from one Swiss account and depositing into another.
    - gbrindisi 13y ago
      I know it's used for child pornography, carding and malware related incomes but not for child slavery. From the little I saw on underground forums LR is used for mid to low criminal incomes, by the like of botnet herding profits and carding infos trade. For things bigger and riskier like cashing out massive amounts of stolen cards and bank drops it's my understanding that cybercrooks are using money mule schemes and networks of off shore companies, not LR or similar... I'd flag child slavery as an high risk activity which can't be done just trough LR-like currencies, that's why I was asking for some sources.
pvnick 13y ago
Mirror: http://archive.is/heI1J http://archive.is/heI1J
xSwag 13y ago
Does not surprise me at all. Almost every cyber crime forum (Damagelab, exploit.in, Darkode, carder.pro, opensc etc) used Liberty Reserve (LR) to receive payments for malware, credit cards, personal information and other illegal content. This used LR because the payments could not be reversed and because the company did not comply with law enforcement. Not to worry though, Bitcoin seems to be getting more and more popular among these forums and will probably take over.
- gbrindisi 13y ago
  opensc is not a cyber crime forum. Greyhat at most.
- jtome 13y ago
  webmoney seems to be alot more popular among these types than bitcoin
- bluetooth 13y ago
  The central hub of script kiddies, Hackforums, recently moved to bitcoins as soon as word of the feds getting hold of LR went out.
cpursley 13y ago
This is what I kept trying to say on here but always get downvotes. Nation states will fight hard and dirty against digital currencies, as it completely undermines their fiat currency inflationary economies.
- betterunix 13y ago
  You keep getting downvotes because you are wrong. Alternative currencies -- digital or not -- in no way threaten fiat currencies. The reason is well-understood by economists: law-abiding citizens and businesses have frequent interactions with the government, which demands payment in a fiat currency. The vast majority of businesses that accept Bitcoin payments, even on the black market, do so only because they ultimately convert Bitcoin into fiat currency (hence the popularity of Bitcoin payment processors that do this automatically).
  - cpursley 13y ago
    I'm not wrong because of the above example. Nation states have begun coming down on digital currency and this trend will only increase.
    - betterunix 13y ago
      You are wrong about the reason. Nobody is worried that any digital currency is going to undermine fiat currencies. The concern is about enforcing the same regulations that apply to other financial services, which a lot of digital currencies have not bothered to abide by.
- ars 13y ago
  > Nation states will fight hard and dirty against digital currencies, as it completely undermines their fiat currency inflationary economies. Is that supposed to be a bad thing?
  - cpursley 13y ago
    No, inflationary fiat policy steals from the frugal, savers and fixed income people and rewards the people at the top of the pyramid (financial institutions) who get cheap money from the central banks. Having alternative currencies ensures accountability and honest money. Nation States don't want this, as it restricts their expansion.
user1251 13y ago
Most popular currency for money laundering, terrorism supporting, child pornography and drugs selling is ... USD DOLLAR!
- zalew 13y ago
  > USD DOLLAR! http://en.wikipedia.org/wiki/RAS_syndrome http://en.wikipedia.org/wiki/RAS_syndrome
jtome 13y ago
Probably a good time to invest in bitcoin, although my poor and quick analysis of bitcoin charts doesn't seem to indicate much activity in reaction to this that couldn't be attributed to bitcoin's usual volatility. Webmoney, another shady online payment processer will probably be the greatest beneficiary of this. It's funny that bitcoin isn't used more by botnet owners and their ilk. They seem to be slow adopters of new technologies (notice how they dont use tor either).
stcredzero 13y ago
It's, "New Forms of Cybercrime Fun-Time!" where we think of new ways to structure criminal enterprises to break existing laws and prosecutorial organizations. I call this one, "The Virtual Un-syndicate." You take a small, cohesive group of criminal hackers working out of the same room, and have them simulate the operation of a virtual criminal syndicate staffed by freelancers around the globe. However, instead of using entirely fictional pseudonyms for these freelancers, real identities are hired to be used as pseudonyms. Likewise, a real person's identity is used as a "mastermind" figurehead. The purpose is to hack the standard behavior of prosecuting government organizations. If played correctly, the "mastermind" figurehead and the "freelancers" will take the fall and the prosecutors will be satisfied that they have done their jobs. In the meantime, the criminal hackers have already moved on to establishing their next "Virtual Un-syndicate."
socillion 13y ago
Wow, that is awful timing... Anyone know if they'll be doing any refunds for legitimate transactions? Just got a bit over 2k LR a few weeks back, who'd have guessed I'd lose more money keeping it in LR instead of immediately buying bitcoin. edit: looks like if e-gold is anything to go by it'll be several years at best. sigh.

113 points by samweinberg 13y ago

rdl 13y ago

E-Gold round 47, I guess? It's unclear how predictive the raid on Mt Gox (which appears to be FinCEN MSB registration related, but possibly with more behind it) and LR (which appears to be due to the use of LR by child porn and other illegal activities, ultimately) are for future USG vs. Bitcoin exchangers and other market participants. (also, sigh, he's getting DoSed; using Prolexic, who are usually pretty decent at mitigating these attacks, but it takes a long time to load.)

deleted 13y ago

[deleted]

dariusm5 13y ago

Cached version: http://webcache.googleusercontent.com/search?q=cache:krebsonsecurity.com/2013/05/reports-liberty-reserve-founder-arrested-site-shuttered/ http://webcache.googleusercontent.com/search?q=cache:krebson...

hackerboos 13y ago

I'm surprised they managed to skirt the law for so long when they actively promoted very shady HYIP programs.

jtome 13y ago
Costa Rica has some wacky banking laws which allowed this to go on for as long as it did

DanielBMarkham 13y ago

My opinion on e-currency is evolving the more I see how it's actually working in the real world. Ignoring the fact that bad people many times use e-currency for repulsive things like child slavery, the lesson over the past month or two seems very clear: any form of e-currency is a huge tool for governments to monitor and control economic activity. We think of e-currency as being much easier to move around than printed currency, but it's actually much easier to track and control than printed currency. Yes, it begins as an anonymous and cryptographically-secure form of value representation, but once government adds just a little enforcement tweaking (many times without even having to pass a law) it becomes a big lead weight around the owner's neck. Best-case, it's all tracked down to the penny. Worst-case, you lose all your value. I remain a skeptical fan, though. Here's hoping the community works through these issues.

gbrindisi 13y ago
> Ignoring the fact that bad people many times use e-currency for repulsive things like child slavery Source?
- rdl 13y ago
  E-Gold got used for carders (a lot), HYIPs/moneygames, and, most regrettably, child pornography (this is all in court documents; I consulted for E-Gold and worked on an affiliated project back in 1998-1999, about a decade before the prosecution). It was funny running into Carol Van Cleef, a lawyer from Patton Boggs, who defended E-Gold after they were convicted (in implementing the agreement), at the Bitcoin 2013 conference (she knew my name from docs, but we'd never met). E-Gold actually was helping prosecutors vs. the carders/cp people, and maintaining files on them/actively working with law enforcement, but when it became a criminal case about E-Gold, that information was used as evidence the system itself supported these activities. LR is probably in the same position; I know they have essentially the same market positioning.
- the_mitsuhiko 13y ago
  You don't even need a source for this, it should be obvious that it's used for that.
  - shocks 13y ago
    You mean exactly the same way that pound sterling and dollar are used for illegal things too?
    - lmm 13y ago
      I understood that large criminal transactions were generally done in CHF - larger-denomination notes available, and it avoids currency conversion costs when you're withdrawing from one Swiss account and depositing into another.
  - gbrindisi 13y ago
    I know it's used for child pornography, carding and malware related incomes but not for child slavery. From the little I saw on underground forums LR is used for mid to low criminal incomes, by the like of botnet herding profits and carding infos trade. For things bigger and riskier like cashing out massive amounts of stolen cards and bank drops it's my understanding that cybercrooks are using money mule schemes and networks of off shore companies, not LR or similar... I'd flag child slavery as an high risk activity which can't be done just trough LR-like currencies, that's why I was asking for some sources.

pvnick 13y ago

Mirror: http://archive.is/heI1J http://archive.is/heI1J

xSwag 13y ago

Does not surprise me at all. Almost every cyber crime forum (Damagelab, exploit.in, Darkode, carder.pro, opensc etc) used Liberty Reserve (LR) to receive payments for malware, credit cards, personal information and other illegal content. This used LR because the payments could not be reversed and because the company did not comply with law enforcement. Not to worry though, Bitcoin seems to be getting more and more popular among these forums and will probably take over.

gbrindisi 13y ago
opensc is not a cyber crime forum. Greyhat at most.
jtome 13y ago
webmoney seems to be alot more popular among these types than bitcoin
bluetooth 13y ago
The central hub of script kiddies, Hackforums, recently moved to bitcoins as soon as word of the feds getting hold of LR went out.

cpursley 13y ago

This is what I kept trying to say on here but always get downvotes. Nation states will fight hard and dirty against digital currencies, as it completely undermines their fiat currency inflationary economies.

betterunix 13y ago
You keep getting downvotes because you are wrong. Alternative currencies -- digital or not -- in no way threaten fiat currencies. The reason is well-understood by economists: law-abiding citizens and businesses have frequent interactions with the government, which demands payment in a fiat currency. The vast majority of businesses that accept Bitcoin payments, even on the black market, do so only because they ultimately convert Bitcoin into fiat currency (hence the popularity of Bitcoin payment processors that do this automatically).
- cpursley 13y ago
  I'm not wrong because of the above example. Nation states have begun coming down on digital currency and this trend will only increase.
  - betterunix 13y ago
    You are wrong about the reason. Nobody is worried that any digital currency is going to undermine fiat currencies. The concern is about enforcing the same regulations that apply to other financial services, which a lot of digital currencies have not bothered to abide by.
ars 13y ago
> Nation states will fight hard and dirty against digital currencies, as it completely undermines their fiat currency inflationary economies. Is that supposed to be a bad thing?
- cpursley 13y ago
  No, inflationary fiat policy steals from the frugal, savers and fixed income people and rewards the people at the top of the pyramid (financial institutions) who get cheap money from the central banks. Having alternative currencies ensures accountability and honest money. Nation States don't want this, as it restricts their expansion.

user1251 13y ago

Most popular currency for money laundering, terrorism supporting, child pornography and drugs selling is ... USD DOLLAR!

zalew 13y ago
> USD DOLLAR! http://en.wikipedia.org/wiki/RAS_syndrome http://en.wikipedia.org/wiki/RAS_syndrome

jtome 13y ago

Probably a good time to invest in bitcoin, although my poor and quick analysis of bitcoin charts doesn't seem to indicate much activity in reaction to this that couldn't be attributed to bitcoin's usual volatility. Webmoney, another shady online payment processer will probably be the greatest beneficiary of this. It's funny that bitcoin isn't used more by botnet owners and their ilk. They seem to be slow adopters of new technologies (notice how they dont use tor either).

stcredzero 13y ago

It's, "New Forms of Cybercrime Fun-Time!" where we think of new ways to structure criminal enterprises to break existing laws and prosecutorial organizations. I call this one, "The Virtual Un-syndicate." You take a small, cohesive group of criminal hackers working out of the same room, and have them simulate the operation of a virtual criminal syndicate staffed by freelancers around the globe. However, instead of using entirely fictional pseudonyms for these freelancers, real identities are hired to be used as pseudonyms. Likewise, a real person's identity is used as a "mastermind" figurehead. The purpose is to hack the standard behavior of prosecuting government organizations. If played correctly, the "mastermind" figurehead and the "freelancers" will take the fall and the prosecutors will be satisfied that they have done their jobs. In the meantime, the criminal hackers have already moved on to establishing their next "Virtual Un-syndicate."

socillion 13y ago

Wow, that is awful timing... Anyone know if they'll be doing any refunds for legitimate transactions? Just got a bit over 2k LR a few weeks back, who'd have guessed I'd lose more money keeping it in LR instead of immediately buying bitcoin. edit: looks like if e-gold is anything to go by it'll be several years at best. sigh.