The flip side of Bitcoins

The flip side of Bitcoins

The investigation into the online money transfer firm Liberty Reserve has not only thrown the spotlight on a murky and little- understood corner of the financial markets but also drawn Singapore into a high-profile criminal case.

The online currency industry - making cash transfers via the Internet or using virtual currency like Bitcoins - is booming but is poorly regulated, as highlighted by the shady activities revealed in the Liberty Reserve case.

Last week, United States authorities charged founder Arthur Budovsky and six others with conspiracy to commit money laundering and operating an unlicensed money-transmitting business.

Liberty Reserve is alleged to have played a key role in laundering the proceeds from the recent theft of about US$45 million (S$56.2 million) from two Middle Eastern banks.

It is alleged that part of the scam involved a Dominican Republic gang member depositing thousands of dollars of stolen cash into two Liberty Reserve accounts via currency centres based in Siberia in Russia and Singapore.

Singapore police say they are helping US law enforcement authorities with the investigation.

US authorities say the Middle East bank theft is just the tip of the iceberg.

They claim the anonymity provided by Liberty Reserve - users could open accounts using fake names and addresses - allowed about US$6 billion of dodgy cash to be laundered.

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