The former chief technology officer of one of the world’s most popular digital currency services has pleaded guilty to money laundering charges in federal court.
Mark Marmilev, 35, of Brooklyn, former CTO of Liberty Reserve, pleaded guilty in front of U.S. District Judge Denise L. Cote in New York last week on charges that he helped launder billions in suspected criminal proceeds.
“Marmilev designed and maintained a massive criminal infrastructure in cyberspace for one of the world’s most widely used digital currency systems, which laundered billions in criminal proceeds,” said Assistant Attorney General Leslie R. Caldwell, in a statement. “This is the third conviction in the largest international money laundering case ever brought by the department, and we will continue to ensure that virtual currencies are not misused to facilitate criminals hiding from the U.S. justice system.”
According to allegations in the indictment and statements made in related court proceedings, Liberty Reserve was incorporated in Costa Rica in 2006. It was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes and emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder their profits, according to authorities.
Before being shutdown in May 2013, Liberty Reserve had more than one million users worldwide – including more than 200,000 users in the United States – who conducted roughly 55 million transactions through its system totaling more than $6 billion in funds. These funds included suspected proceeds from credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking and other crimes.
Marmilev and Liberty Reserve founder Arthur Budovsky were among seven individuals charged in the indictment. Two co-defendants – Vladimir Kats and Azzeddine el Amine – have previously pleaded guilty and are awaiting sentencing. The indictment also charged Liberty Reserve with conspiracy to commit money laundering and operation of an unlicensed money transmitting business, and the charges remain pending, authorities said.
“As the chief technology officer of Liberty Reserve, Mark Marmilev was responsible for the infrastructure of a global payment processor and money transfer system that catered largely to criminals,” said U.S. Attorney Bharara. “With his guilty plea [Sept. 11], we are one step closer to holding to account everyone integrally involved in this sprawling Internet enterprise that served as a central financial institution for cyber criminals and illegal transactions of numerous kinds.”
Marmilev is scheduled for sentencing Dec. 12.
“The collapse of Liberty Reserve may have caused some headaches for the world’s cybercriminals, but its place has been taken by Bitcoin and other digital currency systems with built-in anonymity features,” noted John Hawes, on the Sophos Naked Security blog.