Tuesday, May 28, 2013

U.S. shuts digital money system it suspects of criminal links....Will bitcoin be next?

U.S. authorities revealed on Tuesday they have shut down a Costa Rica-based money transfer company they said helped cyber criminals around the world launder around $6 billion in illicit funds using digital currency.

In a statement, officials said authorities in Spain, Costa Rica and New York arrested five people on Friday and seized bank accounts and Internet domains associated with the company, Liberty Reserve.

Costa Rican prosecutor José Pablo González said Liberty Reserve and related businesses were used to launder funds from child pornography websites and drug trafficking.

Digital currency is made up of transferable units that can be exchanged for cash. Over the past decade, its use has expanded, attracting attention from the media and Wall Street. The most widely known digital currency is called Bitcoin. Liberty Reserve's currency was not connected to Bitcoin.