By: Wesley Long
Liberty Reserve, an online money transfer and currency exchange service based in Costa Rica, was targeted for investigation and shutdown last week with help from the USA PATRIOT Act, according to this report from The Hill.
“Liberty Reserve, an online money transfer system based in Costa Rica, is charged with allowing criminals to send money around the world, in what the government believes is the largest global prosecution of this type in history.
Under the service, users can anonymously convert money into virtual currency and transfer it from account to account, which officials at the Justice and the Treasury departments say allows criminals to hide the sources of their money.”
”The Treasury Department designated the service under a section of the Patriot Act that targets money-laundering operations. The designation allows the department's Financial Crimes Enforcement Network (FinCEN) to propose prohibiting American financial institutions from interacting with Liberty Reserve.
Liberty Reserve is the first virtual currency provider to be designated under the Patriot Act provision.”
This turn of events is significant for two reasons:
Firstly, it draws attention to the Treasury Department’s insecurity regarding the stability of the Federal Reserve Note as a viable currency. Officially, of course, they would never concede this point; the U.S. dollar is, after all, the world reserve currency. But a sound medium of exchange holds its value, performing well against other currencies, because it has intrinsic value, such as being pegged to a valued commodity. This is not of true of the U.S. dollar, which has essentially been rendered a fiat currency, courtesy of FDR, and later, Nixon. One can therefore understand, though not justify, why the Treasury Department is eager to crack down on services which could offer an alternative medium of exchange.
The second, and crucial, aspect of this case is use of the USA PATRIOT Act. Rammed through congress in the immediate aftermath of 9/11, this Orwellian monstrosity cedes sweeping powers to various enforcement branches of the federal government. In addition to eroding civil liberties, via provisions authorizing warrantless wiretapping and surveillance, the act yields investigatory powers to the Treasury Department. Ostensibly, this activity is for the purpose of following paper trails left by international terrorists. But as evidenced by this case, the PATRIOT Act is being used to justify the targeting of a private company based outside the U.S. and based on nothing more than conjecture.
It is time to repeal the PATRIOT Act, and require our government to follow the appropriate constitutional channels when seeking to investigate people and companies.