(Adds details on plea, background on case)
By Nate Raymond
NEW YORK, Jan 29 (Reuters) - The co-founder of the Liberty Reserve digital currency service pleaded guilty to a criminal charge on Friday, days before he was to go on trial accused by U.S. prosecutors of enabling criminals worldwide to launder more than $6 billion.
Arthur Budovsky, 42, admitted he knew Costan Rican-based Liberty Reserve was "susceptible" to be used by criminals, including for Ponzi schemes. He pleaded guilty in Manhattan federal court to a money laundering conspiracy charge.
"I knew what I did was illegal," Budovsky, in blue jail clothing, told U.S. District Judge Denise Cote.
Budovsky faces up to 20 years in prison. He is scheduled to be sentenced May 6.
Liberty Reserve operated what U.S. prosecutors called one of the world's most widely used digital currency services, which was used by criminals involved in hacking, child pornography and drug trafficking.
The company was shuttered in May 2013 amid U.S. efforts to crack down on the use of digital currencies including bitcoin to evade law enforcement and launder illicit proceeds.
Authorities have called the case the largest international money laundering prosecution in history, involving more than $6 billion of proceeds from 2006 to 2013.
Four people previously pleaded guilty in the Liberty Reserve case, including Budovsky's co-founder Vladimir Kats.
Budovsky and Kats, 44, previously were convicted in 2006 on New York state charges for operating an unlicensed money transmitting business, the Goldage digital currency exchange.
In court, Budovsky said Katz in 2002 approached him about developing Liberty Reserve, and they launched its website in 2005.
It was incorporated a year later in Costa Rica, prosecutors said. Budovsky, who had been living in New York, later renounced his U.S. citizenship and became a Costa Rican citizen.
Prosecutors said Liberty Reserve users would buy and redeem its digital currency, LR, through third-party exchangers who in turn bought and sold LR in bulk from Liberty Reserve.
Liberty Reserve did not require users to validate their identities, prosecutors said, allowing an undercover Secret Service agent to establish an account for a "Joe Bogus" from "Completely Made Up City, New York, United States."
The website became a hub for criminals, facilitating identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking, prosecutors said.
Some of the top websites driving traffic offered stolen credit card data, prosecutors said, while about $1.4 billion in transactions were tied to online Ponzi schemes.
The case is U.S. v. Kats et al, U.S. District Court, Southern District of New York, No. 13-cr-00368. (Reporting by Nate Raymond; Editing by Tom Brown and Grant McCool)