The Atlantic offers a report on the indictment of Liberty Reserve, a massive online currency operation that brazenly laundered money around the world. How much money?
Liberty Reserve, the DOJ claims, laundered more than $6 billion of dirty money between 2006 and May 2013. They had more than a million clients and processed 55 million financial transactions. The founders were able to skim tens of millions of dollars, prosecutors allege, which were stored in bank accounts all over the world.
The trivially simple process involved blindly accepting cash in exchange for LR credits, and providing easy, electronic transfers of those credits among accounts and across international borders, usually through exchangers in countries with little or no banking regulations.
Liberty Reserve’s role was to serve as a broken link in the paper trail, so that transactions could not be traced to or from anyone. Hard currency would go in via an exchanger and then pop out the other side through a different exchanger and into a bank account in some other country.
Swap out “LR Credits” and replace it with “WoW Gold” (or any other MMO game currency). This illustrates the perils of allowing real-money-trade in online games. An anonymous and seamless pool of money that permits cash in and cash out provides an easy way to launder blood money, pay for contraband, hire a hitman, etc.