The charges follow a joint investigation by the Costa Rican and US authorities. There are reports of other arrests and seizures related to both Liberty Reserve and an alleged international money laundering ring. Budovsky was previously arrested in the US for his role in an illegal money transfer service.

Liberty Reserve acted as an anonymous method of transferring funds online. It operated through ‘virtual’ equivalents of the dollar and euro, redubbed LRUSD and LREUR.

The small transaction fees for the service – a maximum of $2.99 (€2.30) – meant it was used by some businesses as a low-cost alternative to services like PayPal. However, its anonymity is suspected to have made it a popular way for cybercriminals to transfer funds as well. The Guardian report the service is suspected of having been used to hide and transfer money after a major Middle Eastern 'bank heist' worth nearly €35 million.

Computer security specialist Brian Krebs writes “if Liberty Reseve stays offline, this could cause a major upheaval in the cybercrime economy….The administrator of [a] cybercrime forum… has been telling forum members that the entire incident is the work of professional hackers working for Liberty Reserve’s competitors.” Both criminals and more legitimate users could potentially lose their Liberty Reserve stocks if the service isn’t restored.

Virtual currencies, once a very small niche of the Internet economy, have received increased attention this year on the back of the sudden popularity of Bitcoin. Over the first few months of the year, the number of users trading in the Bitcoin currency exploded, partially as a result of the economic crisis in Greece and Cyprus. April saw the volume of transactions increase significantly, with the valuation fluctuating wildly as dedicated servers struggled to cope with demand. After the level of inflation and trading normalised, Bitcoin supplies were estimated to have a value of around €770 million.