On Tuesday, federal prosecutors charged seven people with running what might be the largest money-laundering operation in United States history. The case revolves around the online payment company Liberty Reserve, which allegedly helped launder $6 billion for criminals around the world, including drug dealers, credit card fraudsters, and child pornographers.

Prosecutors described the scope of the operation as “staggering,” saying that over the course of seven years the Costa Rica-based online network processed over 55 million illegal transactions for 1 million users, including at least 200,000 in the U.S.

"As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes — the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers and traffickers," said Preet Bharara, U.S. Attorney for the Southern District of New York, in a statement. "The global enforcement action we announce today is an important step towards reining in the 'Wild West' of illicit Internet banking."

Liberty Reserve charged a one percent fee on all transactions, which included ones run by middlemen known as “exchangers,” who, as the AP put it, “converted real currency into virtual funds and then back into cash."

The standards for transferring funds online through the company were shockingly lax, as evidenced by the results of an undercover operation by federal investigators.

From the Associated Press:

Liberty Reserve allowed users to open accounts using fictitious names, including "Russian Hacker" and "Hacker Account." An undercover investigator was able to register using the name "Joe Bogus" and the address "123 Fake Main Street" in "Completely Made Up City, New York," and then conduct transactions he recorded as "ATM skimming network" and "for the cocaine."

Liberty Reserve's founder, Arthur Budovsky, was arrested Friday in Spain and is awaiting extradition to the U.S. His partner, Vladimir Kats, is in custody in New York. Liberty Reserve's website was shut down Tuesday and now states that it "has been seized by the United States Global Illicit Financial Team."

[CBS News/AP/Image via AP]

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