Leading Digital Currency Executive Pleads Guilty to Transmitting Funds From Criminal Activity

Preet Bharara, the United States Attorney for the Southern District of New York, and Leslie R. Caldwell, Assistant Attorney General for the Justice Department’s Criminal Division, announced that MARK MARMILEV, the former chief technology officer of Liberty Reserve, pled guilty today in Manhattan federal court to conspiring to operate an unlicensed money transmitting business that he knew involved the transmission of funds derived from criminal activity. MARMILEV was principally responsible for designing and maintaining the technological infrastructure for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services. MARMILEV was arrested in Brooklyn, New York, in May 2013 and pled guilty today before U.S. District Judge Denise L. Cote.

Manhattan U.S. Attorney Preet Bharara 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. With his guilty plea today, 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.”

Assistant Attorney General Leslie R. Caldwell said: “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. 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 enable criminals to hide from the U.S. justice system.”

According to allegations contained in the Indictment filed against Liberty Reserve, MARMILEV, and six other individual defendants, and statements made in related court proceedings:

Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It 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. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions.

Before being shut down by the U.S. government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system totaling more than $6 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes.

MARMILEV was an associate of Liberty Reserve founder Arthur Budovsky and served as Liberty Reserve’s chief technology officer. In that role, MARMILEV was principally responsible for designing and maintaining Liberty Reserve’s technological infrastructure.

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MARMILEV, 35, of Brooklyn, New York, pled guilty to one count of conspiring to operate an unlicensed money transmitting business that failed to comply with federal registration requirements and that MARMILEV knew involved the transmission of funds derived from criminal activity, which carries a maximum sentence of five years in prison. A sentencing date has not yet been scheduled. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Marmilev and Budovsky were among seven individuals charged in the indictment, which was unsealed on May 28, 2013, and two co-defendants – Vladimir Kats and Azzeddine el Amine – previously pleaded guilty and await 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.

Mr. Bharara praised the outstanding work of the United States Secret Service, the Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, which worked together in this case as part of the Global Illicit Financial Team. Mr. Bharara also thanked the United States Secret Service’s New York Electronic Crimes Task Force for their extraordinary assistance with the investigation. Additionally, Mr. Bharara specially thanked all the international law enforcement agencies that assisted in the investigation, in particular, the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office.

This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section (“AFMLS”), which is overseen by Assistant Attorney General Leslie R. Caldwell. Mr. Bharara thanked AFMLS for its partnership and also thanked the Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section for their support.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Serrin Turner, Andrew Goldstein, and Christine Magdo of the Southern District of New York and Trial Attorney Kevin Mosley of AFMLS are in charge of the prosecution, and Assistant United States Attorney Christine Magdo is in charge of the forfeiture aspects of the case.

The charges contained in the Indictment against certain of MARMILEV’s co-defendants remain pending and are merely accusations. Those defendants are presumed innocent unless and until proven guilty.


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