Virtual money for crime and profits

By on June 12th, 2013 in Ethics, Privacy & Security, Societal Impact, Topics

The US Department of Justice has initiated action against Liberty Reserve, a “digital money” service, for laundering money … which is to say,  helping criminals hide their ill gotten gains from authorities.  This is a consideration for all variations of fungible digital assets.

Clearly some environments, such as Pay Pal, provide one path for abuse founded on local hard currency (or at least as hard as credit cards get.)  Bit-Coin is at the other extreme, establishing its own currency, with limited ability to create new coins.  This approach has had it’s ups and downs (exchange rates for Bitcoins have been in flux.)  There are other variations such as Linden Dollars in Second Life, or the ‘gold’ of World of Warcraft. These systems are fungible because value “in game” can be translated to real money outside the game. Folks have actually become wealthy doing “real” estate or “products” in Second Life.

It is not too hard to envision many ways to accomplish the money laundering and transfers that may no longer be available via Liberty Reserve.  If the Feds really want to track things, perhaps they should open their own virtual bank.  Or, perhaps they have.