For the digital currency to survive, must it sacrifice its soul? Can it thrive if it does?
To be sure, there are important differences between bitcoin and Liberty Reserve. Where Liberty was effectively a black box for transactions, controlled by a single entity, bitcoins are traded on a peer-to-peer network independent of any central authority. (Bitcoin did have its own law-enforcement episode on May 17, when the Department of Homeland Security froze the accounts of two U.S.-based bitcoin processors. The alleged misdeed: failing to properly register.)
In the Liberty Reserve case, the illegalities were brash, according to U.S. officials. One million users across the world—one-fifth of them Americans—made 55 million transactions over seven years to the tune of $6 billion, with few questions asked while Costa Rica-based Liberty collected 1 percent, investigators said. The network is thought to have been employed in the $45 million ATM heist for which eight people were arrested in May. Read more >>