The fall of Liberty Reserve: significance to the business world

Liberty Reserve has been one of the largest online payment processors for over a decade. It had grown in such popularity that it became one of the most trusted and noteworthy processors to be used by even financial brokers and other businesses. The major problem, however, was the authenticity of the company and the transparency of the transactions it carried out. Danger was lurking around this site for the last few months leading up to its closure towards the end of May, 2013. The unexpected fall of Liberty ReserveSo what is the significance of the closure of such a site? In the world of online business, moving money quickly from one place to the other is a luxury. Liberty Reserve facilitated the ease of carrying out quick transactions without any questions being asked. Nevertheless, every online transaction was supposed to be accounted for, since the world is plagued with money laundering and terrorism. The lack of transparency led to the downfall of Liberty Reserve and the arrest of its owner. Most legitimate businesses suffered for two main reasons: the first reason is that they had trusted Liberty Reserve to the point of banking huge sums of money with this payment processor. Numerous claims of over US$50, 000 have been filed since the closure. The next main reason is that this processor had a very fast and unique way of operating with a no refund policy. Many foreign exchange and stock market brokers used Liberty Reserve to carry out fast transactions; “Exness” is a classic example of such brokers. Apart from losing money, many brokers were force to reroute payments of traders to other processors, against the normal regulations established. The lesson learnt by all should not be seen as a sporadic or rare case! In fact, caution should be taken with other online processors that may be on the way to face the same fate as that of Liberty Reserve. One of the main measures to protect your money online is to ensure that the payment processor you use is compliant with international financial laws and that their transactions are transparent and regulated.

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