Liberty Reserve and Government Control of Money 170

I have my doubts about the closure of Liberty Reserve. It is widely reported to have had 1 million users. I am not yet convinced that a higher percentage of these were criminals, than is true in much of the mainstream banking system. I have been told by an email – which I cannot currently verify – that of the US $6 billion processed through Liberty Reserve, only US$20 million has to date been seized as the proceeds of crime.

It seems to me that a public sickened by the massive charges of bankers for simple intermediary services, will increasingly look for means to exchange value outwith the formal banking sector using modern technology. Services like Western Union are dreadfully overpriced, and make massive profits on home transfers by poor immigrant workers worldwide. It is getting increasingly hard to despatch money as physical cash by a friend. Carrying large quantities of money, even if it is your own, is seen as suspicious.

I was astonished when, during the Norwich by-election, my request to take several thousand pounds worth of cash out of my own bank account to pay various expenses was met with an insistence by the bank that I complete a form saying what it was for. Furious at being denied my own money, I wrote on the form that I needed the money for “Drink and bad women”. That sufficed to meet the stupid regulation.

The US government through aggressive – and in my view illegal – pressure on banks and financial services providers managed to cut off Wikileaks from almost all avenues of sources of international donation funding by individuals. You cannot trust governments to have the power to control all funds transfers. Governments will abuse that power.

Of course proceeds of crime should be seized. I have no problem with that. Stopping the crime in the first place would be better, but failing that you should track the money and seize it. But the way to do that is not to control everybody’s exchanges of value at all times. It is like asking me for proof I am not going to rob a bank every time I walk out of the house. It would make as much sense to ban mattresses, as stolen cash can be hidden under them, or cars, as stolen cash can be transported in them, as to close down internet transfer options because they might be used to transfer crooked cash.

Am I alone in worrying that the mainstream media’s reporting of this closure has involved simply repeating US government press releases, with no attempt at all to analyse what percentage of Liberty Reserve’s funds were actually criminal proceeds, and compare that to a mainstream bank?

170 thoughts on “Liberty Reserve and Government Control of Money

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  • Abe Rene

    Can banks be sued for refusing to let people withdraw their own money without saying what they are going to use it for?

  • Indigo

    It seems to be business as usual for the mainstream media …

    and as far as closing the whole operation down goes, well, the application of the same logic would have led to HSBC in the States being closed down after it’s massive money laundering activities.

  • DomesticExtremist

    Meanwhile, HSBC, found guilty of laundering countless billions of South
    American drug money, paid a fine (the cost of doing business).
    No accounts were seized, no branches were closed down, HSBC remains
    in business (their share price rose when the fine was announced) and
    nobody went to jail.

    Lord Green of HurstPierrepoint, in charge at the time, was given a
    post in government.

    We live in a banker controlled tyranny.

  • willyrobinson

    Yeah, I was a bit worried by this yesterday when I read it, especially as these same control freak governments refuse the Tobin tax. It’s a bit shit to see competitive grass roots initiatives shut down, but then again, completely anonymous transfers of large sums of cash is worrying too, Craig. And it’s not like a mattress, it’s a bit more like giving everyone a diplomatic pouch. That’s mabye a bit more libertarian than I’m willing to go…

  • fedup

    I wrote on the form that I needed the money for “Drink and bad women”

    Well if this is not an admission!!

    Joking aside, Liberty Reserve is not the only operation targeted by the US authoritarians, Bit coin is another unapproved banking site that has been subject of IRS attentions.

    Fact is bankers know they are onto a good scam, and are enuring that no one muscles in on their manner, so to speak. The banks have ripped off so much, from so many, for so long that these have now a belief of entitlement to all the income/saving/money/assets of everyone on the planet. Hence seeking their henchmen masquerading as the “gobermint” onto anyone daring to challenge them!

    The fact that 75 percent of every Euro/pound/dollar is going in the lieu of interest payment has not come about by letting any pissant to set up their own means of transacting outfits, and take away the Bentleys and private jets from their rightful owners; banksters.

  • Komodo

    That money’s got to be laundered by someone. The money that doesn’t go through brass plate LLP networks, like Blair’s, that is. Any rightwing globalist worth his salt would stop snooping on the banks and let them do it. Thereby enhancing the status of London as the premier criminal economic environment in the world, and supplying a badly-needed boost to our economy. Face it, we’ve got nothing else…

  • April Showers

    Perhaps Mr Budovsky really has ‘Madoff’ with the money?

    Liberty Reserve founder accused of marriage fraud

    Alleged money-launderer Arthur Budovsky may have paid $800 to marry Costa Rican food vendor in bid to avoid extradition

    That is a reprint of an Associated Press article. They are stenographers to power.

    Why the Liberty Reserve money-laundering scandal poses a major threat to bitcoin

  • nevermind

    ” I was astonished when, during the Norwich by-election, my request to take several thousand pounds worth of cash out of my own bank account to pay various expenses was met with an insistence by the bank that I complete a form saying what it was for. Furious at being denied my own money, I wrote on the form that I needed the money for “Drink and bad women”. That sufficed to meet the stupid regulation.”

    I remember it well, the whole of Norwich, including Green Rupert Read were seemingly against your campaign.

    I suppose if you would have said its to pay local Tory councillors for better access to the local media, which, after a county election that returned a balanced NCC, has still not realised that Tory’dom is over in Norfolk.

    It was not this bank by any chance was it?

    Should we make our banks sign a declaration, every time we make large deposits, that they promise not to deal with international criminals? and fine them ourselves when they break it? Because justice is not served by paying a fine.

    How many other drug dealers, apart from those mentioned in Mexico, does HSBC service world wide?

    Having some principals, I’ve just wrecked my credit record, for changing bank accounts from HSBC to the Coop, now for the T-shirts….

  • Yetty Wura

    It is real injustice to free liberty reserve all in the name of criminal acts alone. I have my funds frozen and I am not a criminal. I dont do shady business, I cant even stand shady business. I dont dispute the fact that criminals use LR to do their shady things but justice also demands that those of us who are using it to transact for just cause be put in mind before casting such harsh judgement on LR.
    I want the U.S. Department of Justice to re-think on this decision as someone like me amongst a host of others have been unjustly treated by this devastating action of the U.S. cybercrime investigatory blah blah blah.

  • Blegburnduddoo

    I thought the US action against Liberty Reserve and Bitcoin was to block any threat to the position of the dollar. If so, the perps were lucky to escape with their skins intact. Saddam Hussein and Gaddhafi were not so lucky

  • Mike

    Hi Craig,

    No you’re not alone. The corporate media has been pretty typical in echoing official sources without challenge or investigation. But we must remember that all corporate media are, directly or indirectly, reliant on banks for their very existence and so they’ll never report what could be a challenge to their monopoly.

    Governments may not be trusted to control all money transfers and, as a Bitcoin user, I welcome the competition to these old, established banking giants. But government should take back the power to control money issuance. Why we ever allowed banks to create our nations money supply is a complete mystery to me. And this privilege, when added to bailouts and tax-breaks (avoidance, off-shore Cayman island hedge funds etc) means that the financial services industry as a whole is actually a massive drain on the UK economy. Now I know most people don’t think this way and you’re never likely to hear that banker apologist Boris Johnson say this but the truth is by giving the power to create money to private banks, we have indebted ourselves (and our children) to them for ever.

    This ability or private banks to create money as debt and then charge interest on it has some rather shocking but mathematically factual outcomes. If all our money is created by private banks as interest bearing debt, where exactly is the money to pay the interest supposed to come from. Banks create only the principle. The money to pay back the interest can only come from more debt. This is why, since 1694, our total debt has grown every year. This is why most households, businesses and governments around the world are in debt.

    Our only way out is for government to relieve the banks of this burden to the people and start creating debt-free money. With this sort of monetary reform in place, there would be less need for Bitcoin, banks would become utilities, government could fund all the welfare projects in wanted to, reduce taxes for the poor, even provide a citizens dividend and remove the expensive means-tested benefits system entirely.

  • evgueni

    According to the Wiki article on this “Liberty Reserve was a centralized digital currency service that allowed users to register and transfer money to other users with only a name, e-mail address, and birth date.[1] No efforts were made by the site to verify identities of its users…” If this is true then LR are guilty of worse crimes than those naughty Swiss bankers (who make strenuous efforts to establish the identities of their customers but insist on guarding their customers’ privacy). Wouldn’t LR be deserving of your condemnation then, Craig?

  • geoffrey

    Western governments have no option but to protect the banks.If they let them go bust the debts will end up on their own books making them bust as well.
    They are hand in glove.
    We buy an asset (eg a house) bank lends us the money,bank lends more to others-asset price rises,we feel rich we spend and government taxes us…..everyone happy.
    Asset prices fall,banks go bust,we feel poor,no spending no tax,government has no money,whaaaaaaaaaaa!
    It does feel more and more as if the banks are an arm of government,without their lending just about nothing can happen.

  • Kibo Noh

    Fedup 12 30pm
    Jives 12 45pm


    And I thought I was about to run off with that juicy worm all to myself

    Just as well I rad on down the comments.


    Back on topic, imagine what we could create on this abundant earth once we bring the creation and exchange of currency in line with advances in other technologies.

    Was I correct in believing there is between 29 and 32 Trillion hidden away in off-shore tax-havens?

    Tobin Tax: Yes

    Confiscation: Even Better

    Good Luck to all who sail those seas.

  • Jemand

    I’m pretty sure that this is a sign of things to come. Digital currency is not attached to a sovereign state and has no geographical home, existing only on digital media distributed around the world and transacting through fibre optics instead of paper.

    The banking majors probably see it as a nascent threat to their cosy arrangements in the same way that some IT companies have shaken up other industries. Claims that this method of providing financial services facilitates the activities of organised crime and militant political organisations are probably true, but appear disingenuous when commercial jealousy is involved.

  • Charles Edward Frith (@charlesfrith)

    Apologies if I’m repeating myself but FBI Whistleblower Sibel Edmonds has been spilling a lot of beans on her area of expertise in the Caucasus and Central Asia region as she is multilingual and was a translator. Info she is dropping is like 9/11, NATO run the drug trade, dump it on the Russian market and what they take back to the USA is via Brussels and arrives in Andrews Air Force Base. Also any investigation of Neocons/Zionists is blocked in the USA so they run riot as a criminal syndicate. Usual names, Perle, Feith et al.

  • tristan

    Of course, much of the proceeds of crime are thanks to the idiotic ‘War on Drugs’ which, like prohibition before it, only provides criminals with a lucrative revenue stream (and harms consumers of drugs in a myriad of ways).

    Much easier to end prohibition and bring it all above board.

  • Mike

    Geoffrey, it’s probably more accurate to say government is an arm of the banks, after all, government has to borrow what it can’t raise in taxes and as proverbs tell, the borrower is servant to the lender. How else can we explain the never ending fawning support, the failure to effectively regulate and a blatant reluctance to prosecute the high priests of international finance?

  • JimmyGiro

    Bah bah bureaucrat, have you any money?
    Yes sir, yes sir, three banks full.

    One for the Nomenclatura,
    One for the Army,
    And one for the little soup kitchen, that steams down the lane.

    Taxes are too politically dangerous in a democracy; you ask for more, and you risk being booted out. So the next best thing is to control all the ‘money’ by being its dominant source, and diluting all private wealth.

    Once the ‘money’ is so devalued, then a modern bureaucracy can control the food, and all other essentials, by means of ‘credits’, rather like the old ration stamps.

    The new feudal system will have made democracy redundant, because nobody will be free from the State hand-out; therefore voting for anything other than the orthodoxy, will be deemed seditious. ‘Money’, property, and the pursuit of them, are the last vestiges of personal ‘freedom’; hence they act as obstacles to complete bureaucratic control.

    Tomorrow you will own nothing, for it is not what you have that keeps you alive, but what you are: Tinker, tailor, soldier, sailor, administrator, serf, serf, serf…

  • Komodo

    Irony of ironies, beyond that, Mike. The Government has had to borrow billions (from banks, at interest) to bail out the banks. Chew on that. UK plc is now 35% owned by foreign investment outfits who have bought our government bonds and must be paid interest which we can only raise by borrowing money or printing more bonds.

    We are (as Kinnock might say) totally and absolutely completely and utterly fucked.

    Oh, and Afghanistan has cost us £34Bn to date. Don’t think we’ll be getting any interest on that.

  • fedup

    We are (as Kinnock might say) totally and absolutely completely and utterly fucked.

    Oh, and Afghanistan has cost us £34Bn to date. Don’t think we’ll be getting any interest on that.

    When the last payment on the WWII expenditure was paid back?

  • Ben Franklin -Machine Gun Preacher (unleaded version)

    The ‘collateral’ shell-game is winding down. Phony currency is all we have. But isn’t inherent value a kind of social contract that the majority must subscribe to.

    As long as they can manage and control the supply along with the narrative, the tape and super-glue will hold.

    That’s why there’s been a concerted effort to derogate gold and silver, driving the price down and encouraging re-investment in the Markets of Legerdemain. They must accrue as much value as they can before the whole thing dumps.

    It’s all about the Petrodollar, folks.

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