Liberty Reserve
Started in 2006 and based in Costa Rica, Liberty Reserve was a centralized digital currency exchange and payment processor until it was shut down by U.S. prosecutors in May 2013. Early crypto adopters had used the exchange to transfer funds to exchanges to acquire bitcoin. Liberty Reserve had its own digital currency (which was not a cryptocurrency), the liberty reserve, or LR.
The exchange was founded by Arthur Budovsky and Vladimir Kats, who, prior to starting Liberty Reserve, had been convicted for operating Gold Age, an unlicensed money transmitting business that allowed users to buy, sell and trade the digital currency e-gold, among others. Budovsky and Kats were both sentenced to five years in prison but the sentence was later reduced to five years of probation.
According to the indictment against Budovsky, Kats and several associates, Liberty Reserve did not utilize anti-money laundering tools such as the know-your-customer (KYC) process, and only required users to provide their name, address and date of birth. The indictment alleged the lack of anti-money laundering controls enabled Liberty Reserve to become “a financial hub of the cyber-crime world.”
The indictment estimated the company processed 55 million transactions worth over $6 billion between 2006 and 2013. Kats went on to plead guilty to charges of money laundering, marriage fraud and receiving child pornography. Budovsky pleaded guilty to one count of conspiring to commit money laundering and was sentenced to 20 years in prison. Liberty Reserve’s chief technology officer, Mark Marmilev, was sentenced to five years in prison for conspiring to operate an unlicensed money transmitting business.
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Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.
Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.
Why it matters:
Digital assets posted a third consecutive quarter of losses in Q2 2026, the longest losing streak since the 2022 bear market, as institutional capital rotated into AI equities and Bitcoin ETFs recorded their largest quarterly outflow since launch. Our report examines what drove the divergence, where structural adoption continued regardless, and what Q3 signals to watch.
