A CRIMINAL indictment, filed in New York against Liberty Reserve (LR) and seven current and former employees, has shaken the world of digital currencies. The defendants are charged with running a money-laundering operation that allegedly acted as “a financial hub of the cybercrime world”, serving credit-card fraudsters, identity thieves, hackers and drug traffickers. Authorities estimate that LR processed 55m transactions and laundered $6 billion between 2006 and May 2013. That makes it the largest case in the history of cross-border money-laundering.

With LR’s website shut down—and regulators warning that virtual currencies should follow anti-money-laundering rules more assiduously—cyber-enthusiasts have been left wondering which digital-money business will be next in the prosecutors’ sights. Attention has inevitably turned to Bitcoin, the darling of virtual currencies, which is widely used on Silk Road, an online marketplace for illegal drugs.

But the two are not the same. LR was essentially no more than a digital Western Union or PayPal, albeit one designed to break the rules. Users had to provide a name, address and date of birth, but the firm did not verify the information. It charged a 1% fee per transfer, plus a 75-cent “privacy fee” to ensure untraceability (even within LR’s system). To dodge regulations and avoid creating a paper trail, LR made users deposit and withdraw funds through third-party “exchangers”.

Bitcoin is more of a proper currency, because it can be transferred without recourse to a central clearing house—rather like bundles of dollar bills. But businesses which trade Bitcoins for central bank-issued money, such as Mt.Gox, an exchange based in Japan, resemble Liberty Reserve. They could find themselves chased down by prosecutors if too much dirty money starts flowing through Bitcoin. On May 14th federal agents seized some funds from an account held by Mt.Gox at Dwolla, another online transfer service, on the basis that laws governing money transfers were not being followed.

If prosecutors look for more cases, the most likely targets are online payment services that allow cash to be moved without verifying users’ identities. The number that merely pretend to apply “know your customer” and other anti-laundering rules is thought to be in the dozens. The LR case will make regulators warier of digital-money innovations such as Bitcoin.

The case highlights how hard it is to track such operations. LR’s founder, Arthur Budovsky (pictured on previous page, after his arrest), had been known to the authorities for years. After being prosecuted in America for running an unlicensed money-transmission firm (the home of E-Gold, a now-defunct digital currency), he moved the business to Costa Rica. When local regulators grew concerned, he allegedly designed a fake compliance portal, then pretended to shut the firm down while in fact taking it underground.

But crimefighters’ techniques have evolved too. As well as creating undercover LR accounts, they wiretapped internet connections and executed search warrants for e-mail accounts and internet service providers. Prosecutors’ offices are investing heavily in their cybercrime labs. Money-moving businesses that facilitate digital dodginess will find it increasingly hard to stay a step ahead.