Liberty Reserve Shut Down; What Will Happen to Bitcoin?
Liberty Reserve Shutdown; What About Bitcoin?
Online currency exchange Liberty Reserve was shut down after allegations of laundering $6 billion. The New York Times reported:
The currency exchange, Liberty Reserve, operated beyond the traditional confines of United States and international banking regulations in what prosecutors called a shadowy netherworld of cyberfinance. It traded in virtual currency and provided the kind of anonymous and easily accessible banking infrastructure increasingly sought by criminal networks, law enforcement officials said.
So, what is the impact on Bitcoin? Is Bitcoin next, some media outlets pondered. Well, there are a variety of opinions:
The New York Times reflected on the differences between Bitcoin and Liberty Reserve, commenting that Bitcoin is not anonymous yet, but could be.
Contrary to conventional wisdom, Bitcoin is not anonymous. In fact, security experts say that if prosecutions like Liberty Reserve continue, the most likely targets are major payment systems like WebMoney and eForexGold, payment systems that security experts contend allow their users to move capital anywhere in the world without verifying their identities.
The Washington Post saw more similarities between Liberty Reserve and Bitcoin.
Of course, that description could just as easily describe Bitcoin. Anyone can create a new address for accepting bitcoins and then transmit funds to other Bitcoin addresses without furnishing identifying information. This feature has raised concerns that the currency has been used for activities such as drug dealing or illegal gambling.
Forbes saw a canary in the coal mine, asking is Bitcoin next.
Will prosecutors move on to shutting down Bitcoin (BTC)? After all the parallels between BTC and LR are strong — both are virtual currencies that use an exchange to convert legitimate currencies into electronic ones.
Patrick Murck, legal counsel for the Bitcoin Foundation, wants to avoid that comparison. As he told the Journal, “I think [the Liberty Reserve indictment] is just another giant, flashing warning light to bitcoin exchanges: If you’re not compliant, there are some serious risks, both at the federal and state levels.
Bloomberg was more optimistic, pointing out that Liberty Reserve’s demise is Bitcoin’s gain.
Bitcoin users should embrace the extra scrutiny and welcome the chance to ensure more security, making the currency less accommodating to criminals. Plus, as some Reddit commenters were quick to point out, the demise of Liberty Reserve will mean less competition for Bitcoin.
That’s the round up for the major press outlets. What do you think?
[...] also has caused some concerns amidst government crackdown on other anonymous exchanges, namely Liberty Reserve that has been accused of massive money [...]
[...] a list of all exchanger domain names seized in the money laundering scandal that brought down Liberty Reserve. Note that many of these money exchangers have nothing to do with Bitcoin, but the scope of this [...]
[...] a list of all exchanger domain names seized in the money laundering scandal that brought down Liberty Reserve. Note that many of these money exchangers have nothing to do with Bitcoin, but the scope of this [...]