The Liberty Reserve Scandal

Adrian Birsan
June 17, 2013 by
Adrian Birsan

In this article, we examine the Liberty Reserve money-laundering scandal—a phony story and video as well (it was about another theme, not Budovsky).

A Few words about the incident:

What should you learn next?

What should you learn next?

From SOC Analyst to Secure Coder to Security Manager — our team of experts has 12 free training plans to help you hit your goals. Get your free copy now.

"Arthur Budovsky Belanchuk, the owner of Liberty Reserve website, has been arrested in Spain for charges relating to money laundry. Accordingly, Budovsky was involved in financial crimes for transferring funds made by child pornography websites and drug trafficking.

A lot of threads and discussions have been started in Internet with regard to locking down Liberty Reserve payment system. At this time, many famous and popular websites are using Liberty Reserve as a reliable payment method. Currently a large number of users from different countries have deposited millions of Dollars in their accounts in Liberty Reserve. No information is available about the future of deposited funds.

According to unofficial reports, some $150 million of money is the least cash flow of Liberty Reserve payment system, which has managed to attract customers from all over the world. During the recent years, many hackers have utilized Liberty Reserve for charging their clients and victims anonymously. Unlike other popular payment systems, Liberty Reserve doesn't track the information of its users. The system also deducts a small amount of money per transaction. Liberty Reserve allows no refunds and has no mechanism for performing a chargeback. The site has security protections to help lessen the likelihood of an unauthorized transaction occurring." source: <span">parsherald.com

This is the whole story. Now let's see first video that started this thread, broadcast by a local television from Costa Rica, teletica.com :


As you can see, the video is made from three parts:

  1. A truck going out from mansion.
  2. Press conference (reason of it was arrest of Budovsky, but his name isn't mentioned anywhere)
  3. A person using a computer.

So actually, an unknown publication from Costa Rica started this thread (with a questionable video) and next day many world publications had this on front pages. That looked strange to me so I started read and dig about this.

Let's see what I found:

The Press Conference from initial video is not related to the Liberty Reserve scandal, it belongs to a narcotic trial as you can see below:


Can you find any names of Budovsky or Liberty Reserve here? I didn't, but I did find other video from that topic—take a look:


See the guy on the left? Same tie, same guy. And check for date. It was uploaded on the 24th. That means that was on 23rd. He is sitting near the prosecutor, but who is he and what's was exact nature of his reports. That's what I want you to know. That's how we will know the truth. In that case, we will kick down BBC.

I also found the news with video. The prosecutor (which is on the right of person who is mentioned above) said NOTHING about Budovksy and nothing is mentioned on text of that news.




Any words about Budovsky, Spain, or his arrest? No.

So small news blogs don't care about the things that are discussed on that press conference, and instead of BIG Budovsky they write about some other guy? Does BBC care? Nonsense!

So I am thinking now that the only possibility that the video was linked to the LR arrest is those people (from narco) were using Liberty Reserve to commit their crimes... Maybe they were funding their VCC with LR funds. And then the other guy sometime talked about the Liberty Reserve 'coop' for this guys, and the people who orchestrated this hoax cut the part where he talk about the Liberty system, trying to make us believe that he is talking about the prison of Liberty owner. Now things started to make sense.

And maybe the conclusion is: after this arrests from drug trafficking the government of the US asked LR to cooperate in some way to finish the investigations on this case, and maybe that's why LR is down (pointing for GOV DNS) and the LR staff is quiet because the investigation is on the way and can't be talked on media...

One more time. Video from "news channel" The text said:

  1. Budovsky
  2. Spain arrest
  3. LR.

NOTHING from those key facts was mentioned in the official text or any other news on the net from that date.

PS. Those who are too lazy to translate key fact from news from OFFICIAL website:

  1. Person with name "Pérez" was busted in his house.
  2. He used debit cards for money laundering.

I did also visited the official sites of US, Spain, Costa Rica government, and searched these keywords:

Arthur, Budovsky, Belanchuk >> Result: NOT FOUND. This is an example:

Click to Enlarge

Also when a domain gets seized, the seizure image comes from a .government source, not hosted on the same server as
http://libertyreserve.com/Seized5_HR.png, this is strange as well.

Anyway, after I saw the news today, and I did read all the documents presented here


My conclusion is that Budovsky tried to run away with the money and got caught for that. I might be wrong, but in any event, there's more to this story than we've been told. Judge for yourself, and never accept "official" explanations at face value.

"Never attempt to win by force what can be won by deception."

Become a Certified Ethical Hacker, guaranteed!

Become a Certified Ethical Hacker, guaranteed!

Get training from anywhere to earn your Certified Ethical Hacker (CEH) Certification — backed with an Exam Pass Guarantee.

― Niccolò Machiavelli, The Prince

Adrian Birsan
Adrian Birsan

Adrian Birsan is a freelance web developer and pentester. Says he: "Technology has always been something which captivates me; I like computer security and software development. I am a pentester on my free time and also own a blog where I post useful information. I am a big supporter of Freedom of Speech and ... I play the guitar m/ " His blog can be found at http://softpill.eu/