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How To Avoid Losing Your Money To Online Payment Services Shutdowns Like Liberty Reserve

This is what you see when you visit Liberty Reserve now
Saturday, May 25th, 2013, was a very sad day for many Internet marketers in Nigeria and indeed other parts of the globe as news filtered in that payment gateway, Liberty Reserve, had been shut down after U.S. and Costa Rican authorities arrested founder Arthur Budovsky Belanchuk in Spain.

Unless you’ve been living under the rocks these past few years, you should know that Liberty Reserve was an online payment system used for making and receiving payments for goods and services online.

While you may have escaped incurring any loss in the recent Liberty Reserve shutdown - perhaps because your Internet business has not grown to the extent of having to make and receive payment outside the shores of Nigeria - some Nigerians who use Liberty Reserve to make and receive payments online were not so lucky as they have since been counting their losses running into several thousands of dollars as a result of the sudden shutdown.

Yes, you may have escaped being part of this mammoth loss inflicted on Nigerian Internet marketers by LR shutdown, but you may not be that lucky by the time your Internet business grows to the stage of having to depend on certain online payment services to pay and receive money online from clients in different parts of the world, unless of course, you make efforts to guard against these repeated shutdowns of highly patronised digital currency exchangers, starting with reading this report.

First it was egold, then e-bullion. INTGold, StormPay, Altergold, ePassporte followed in quick succession with all of them having their services shutdown in their prime, with users’ monies running into millions of dollars evaporating into thin air.

The allegations against Liberty Reserve’s owner Arthur Budovsky Belanchuk, according to investigators, is that Budovsky’s businesses in Costa Rica, including Liberty Reserve, were used to launder money for child pornography websites and drug trafficking.

According to Ifeanyi Uche, a Nigerian Forex trader and coach who used Liberty Reserve on a large scale, Liberty Reserve’s shutdown was not really surprising. He says, “Many scams and crimes have been perpetrated through Liberty Reserve over the past few years here in Nigeria. We have witnessed genuine businesses punished for a crime they knew nothing about. Some of these criminals would steal and launder the money through Liberty Reserve. Some have even used it as a means of cashing their kidnapping loot.
Ifeanyi Uche

“The EFCC has arrested in the past some innocent Nigerian entrepreneurs and punished them, and some have had their bank accounts frozen because one criminal was involved in a transaction or two with them using Liberty Reserve without them knowing it was laundered money. 

“Bottom line, the US Federal Prosecutors alleged in their own words that “Liberty Reserve has become a financial hub of the cyber-crime world, facilitating a broad range of online criminal activity. Money laundering and facilitation of cyber criminal activities are some of the reasons Liberty Reserve was shut down”.

But despite having a bad reputation of attracting users involved in cybercrime due to the ease with which it enabled customers to set up accounts (Using little more than a valid email address), genuine users of Liberty Reserve, usually in countries where PayPal is not available, still see LR as a reliable alternative to PayPal.

This is especially true in Nigeria where a lot of genuine Internet marketers carry out genuine online transactions worth thousands of US dollars with their LR account, like funding or making withdrawals from their Forex trading accounts, making or receiving payments for digital/physical goods  sold, or bought, etc.

Nigerian Netpreneurs Count Their Losses

Dennis Isong (Author of How To Sell Anything On The Internet and CEO, shared with SuccessDigest how he narrowly escaped losing lots of money in the Liberty Reserve shutdown.

According to him, his saving grace was that he didn’t keep money in his LR accounts. That notwithstanding, Dennis lost some money in his four different LR accounts with one of the accounts having over N70,000 worth of LR, being payments for some recently offered services.

Is There A Possibility Of Getting Your Liberty Reserve Money Back?

In one of leading online website ( posts, a reader, Jonathan Capistrano, who claimed to have contacted LR about the status of people’s funds was told that LR will not be closing down but just taking a break.

He was told that LR will be back ‘new and better’ and that users’ funds will stay there, with no reduction or increase in value.

Ifeanyi Uche says, “This is not the first time this kind of thing is happening. In 2007, eGold owned by Gold & Silver Reserve Inc, Australia, was shut down under similar circumstances and the CEO Dr. Douglas Jackson and other principal owners were arrested.

“Did all that lost their funds and holdings in eGold get their money back? CAPITAL NO! The same will apply here because the company that owns Liberty Reserve as well as the owners have already been indicted to have engaged in criminal activities including money laundering.”

So, based on these past experiences, Nigerian Liberty Reserve users would do better to kiss LR money goodbye and move on.

How To Guard Against Losing Your Digital Money In The Future

From past experience, every collapsed digital currency exchanger displays signs of distress a long time before it finally collapses. The problem is most people don’t see these signs, while others who see them don’t know the implications of these signs. Below are signs experts advice you to watch out for to determine whether a payment system is appropriate or inappropriate for you:

1. Avoid any system that is not licensed by appropriate government agencies, it means it is not regulated. As a result, someone or few individuals can determine what happens to your money without you getting any help from anywhere. 

2. Avoid any payment system that looks for every means available to avoid government regulated banking institutions. It means it doesn’t want anyone to know what is going on in its system which is dangerous, because such money can be used for illegal services, including funding of terrorism. 

3. Avoid any system that does not allow chargeback! This simply means that money stolen from one account cannot be reversed, and that is an encouraging platform for fraudsters.

4. If the system wants you to operate anonymously while asking you to put in your money in the system, stay away from it. The day trouble will come; it will be hard for you to prove that you are the owner of your money. 

All along, Liberty Reserve exhibited all these signs, but many Nigerians, mostly out of ignorance, risked their hard-earned money by continuing to use the system.

When in doubt of the authenticity of a payment system that you can’t avoid using, play safe to guard against losing your hard-earned money to such payment platforms by not keeping large sums of money in your accounts on such payment systems.

This strategy worked perfectly for Ifeanyi Uche as he had just $11 in his account when Liberty Reserve was shut down, despite the huge volume of transactions he used to carry out using the platform. Considering the number of customers he services, you can imagine how much he would have lost but for this strategy.

In his words, “I help people pay for digital products, goods and services online through PayPal, Payza and Liberty Reserve, but I do not leave much of my funds in the system.

“My advice is simple; do not leave how much you cannot afford to lose in any online payment system, since whether the system stays on or not is beyond your control. Also, be sensitive enough to discern a system infiltrated by criminals and do your best to find a better alternative. 

"Some of my friends who were big exchangers on Liberty Reserve left the platform long time ago as if they knew what was coming. Some left 2 years ago. So, you have to be sensitive and avoid problems you cannot handle. Do not store money you cannot afford to lose.

Safe Alternatives To Liberty Reserve Available To Nigerian Netpreneurs

Business, they say, is for the lion-hearted. Therefore, the shutting down of Liberty Reserve should not mean the end of road for genuine netpreneurs. Real netpreneurs like Dennis Isong and the likes have already put the losses incurred in the LR shutdown behind them and have started exploring other payment alternatives.

One which came highly recommended by Dennis Isong and other Nigerian Internet marketers is Payza (, formerly Alertpay.

Ifeanyi Uche says that since PayPal still does not accept Nigerian residents, Payza is a better alternative.

“The reason Payza is a better alternative is because they have mechanisms for checking money laundering activities. They have limits for deposits and withdrawals for each account type: individual, business, verified or non-verified. If you can afford the fees and you are doing large transactions you can transfer funds via bank wire, else you can make use of local exchangers ,” Ifeanyi says.

Another recommended payment system is Bitcoin, though not popular in Nigeria yet. Egopay is another. There are several of them, but these are the few experts recommend for Nigerians to use as alternatives for now.

But remember never to leave any amount you cannot afford to lose in any of these payment systems to guard against losing your hard-earned money to system shutdowns.

Last but not the least is bank wire. Using bank wire is still the safest way to make payments to clients abroad, though not without its own share of problems. It is slower and comes with some really outrageous charges.

Online payment experts all over the world posit that Liberty Reserve’s demise is simply a logical outcome for any and all payment systems out there which are ‘short’ of getting money-transmitting licenses all over the world, and in US in particular.

We’ve seen many of them ‘come and go’ and for LR it was only a matter of time.
The most important lesson one should draw from all these closures of the past is NEVER to keep excessive amounts of funds in any of such payment processing systems.

*****The End*****

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