As you have probably notices, the Liberty Reserve’s website has not been working for a couple of days. Since the users of this most popular payment processor have been wondering what is going on behind the curtains, money-monitor is there to shed some light on the problem.
First of all, what has to be said is that it’s not the first time such malfunction has appeared. However, usually a similar situation seemed planned, because LR had informed the users beforehand on its blog or, in instances when it was simply an unforeseen fault, such piece of information would appear in a matter of hours. What is different this time is that neither the website, nor the official blog – which, by the way, was not working properly for some time as well – provide us with any kind of update on the situation.
The domain, libertyreserve.com, is practically not even resolving DNS names into the IP addresses.
Here’s the up-to-date whois information:
Domain Name: libertyreserve.com
Created On: 2001-07-27
Expiration Date: 2018-07-27
Registered via: XS Global Trade & Service B.V.
Registrant Name: Allan Garcia
Registrant Organization: Liberty Reserve S.A.
Registrant Street: Edificio 4
Registrant City: Santa Ana
Registrant Postal Code: 1000
Registrant Country: cr
Registrant Phone: +506.88462868
Name Server: ns1.sinkhole.shadowserver.org
Name Server: ns2.sinkhole.shadowserver.org
As you can see, what we seem to have here is a major change of DNS servers from dynect.net to sinkhole.shadowserver.org. Furthermore, the owner of the shadowserver.org is The Shadowserver Foundation, which is known as an agency fighting cybercrime. Thus, the question remains, whether the FBI has taken over Liberty Reserve’s domain since such rumours were appearing each time LR failed to perform in the past. Why should it be anything more than gossip this time? Because as soon as LR’s website went down, the news coverage started suggesting that LR’s owner, Arthur Budovsky, was in fact arrested.
According to the sources such as ticotimes.net and teletica.com, as a result of Spanish and Costa Rican police cooperation regarding an investigation into money laundering, Arthur Budovsky was taken into custody on May 24 in Spain. What’s more, as ticotimes.net and teletica.com claim, Budovsky’s Costa Rican estate, offices, servers, documents, computers and telephones were also secured by the police.
The case against Bydovsky, a Costa Rica citizen born in Ukraine, was launched in 2011 by the New York district attorney. Due to the fact that Budovski’s business was supposedly thought to have been financed by child pornography websites and drug trafficking, the major focus seemed to be the payment processor and its financing. What still seems unclear, however, is whether Arthur Budovsky is, in fact, the owner of Liberty Reserve.
We managed to track down an interview dating back to May 20, 2002, conducted by no longer existing service PlanetGold. The interview, Ragnar Danneskjold, talks to a Liberty Reserve representative, that is Arthur Budovsky, who claims to be a single child of a German mother and a Ukrainian father, both of whom had emigrated to the US. One should point out, however, that Ragnar Danneskjöld is a widely recognized ficticious name of a pirate from Ayn Rand famous novel, Atlas Shrugged, a name that also appears in Victor Hugo’s Hans of Iceland. To add to this, according to another no longer existing service, ecommerce-journal.com, Ragnar Danneskjold is actually Vladimir Kats’ pseudonym.
Knowing this, the fact that – as ticotimes.net reports – according to US Department of Justice, on July 27, 2006 Budovsky and his partner, identified as Vladimir Kats, were accused by the state of New York of conducting illegal financial activities as GoldAge Inc does not seem coincidental in any way. Consequently, one may gather that Vladimir and Artur were working closely together at some point. PlanetGold’s owner, Vladimir Kats, supported his business partner at the very beginning of Liberty Reserve’s activity by promoting LR and cooperating with him as far as GoldAge service was concerned. Thus, one may conclude, that Liberty Reserve was actually run by two co-creators, especially when you see who registered GoldAge’s domain:
Machabeli, Medea firstname.lastname@example.org
1052 Prospect Stachek apt. 118 Saint-Petersburg, Russia 198303, Russian Federation
It doesn’t take Sherlock Holmes to deduce which Ragnar did the paperwork. To add to this, we can also trace this e-mail back to other domains, such as gdcaonline.org (a website moniting and ranking payment processors and exchangers):
Owner: Name: Medea Machabeli
Email: ragnar @ hush.ai
1052 Prospect Stachek apt. 118, Saint-Petersburg, Russia 198303, RU
Therefore, the statement that appears on the following website, http://www.gdcaonline.org/business.php?memberid=169, warning against LR’s main competitor, Perfect Money, does not come as a surprise:
„Fraud, libel, DDoS. Summary: This company, operated by Russian crooks, engages in fraud, DDoS attacks against competitors, libelous websites against competitors, and supports fraudulent businesses, and steals funds from clients every few years only to re-emerge as a different company”.
Another domain connected to LR, asianagold.com, is just another, currently non-existent, exchanger that fell down leaving many unresolved matters and unpaid transcations:
1052 Prospect Stachek
Medea Machabeli Admin
All in all, provided that all the above mentioned information will be confirmed, the future of Liberty Reserved is questionable at best. What’s also unsure is whether the users get their money back since, as we all know, users’ data were not verified and, consequently, many of them gave incorrect information. Moreover, the servers and documents secured by the police may also be extremely useful to the FBI since Liberty Reserve was commonly used by the so-called Ponzi schemes. Hopefully, we will get to know a bit more in the following couple of days.