U.S. authorities revealed they have shut down a Costa Rica-based money transfer company they said helped cyber criminals around the world launder around $6 billion in illicit funds using digital currency.

In a statement, officials said authorities in Spain, Costa Rica and New York arrested five people on Friday and seized bank accounts and Internet domains associated with the company, Liberty Reserve.

Costa Rican prosecutor José Pablo González said Liberty Reserve and related businesses were used to launder funds from child pornography websites and drug trafficking.

Digital currency is made up of transferable units that can be exchanged for cash. Over the past decade, its use has expanded, attracting attention from the media and Wall Street. The most widely known digital currency is called Bitcoin. Liberty Reserve's currency was not connected to Bitcoin.

Along with the five arrests, prosecutors filed charges against two more company employees, who were still at large in Costa Rica.

According to an indictment filed in U.S. District Court for the Southern District of New York, "Liberty Reserve has emerged as one of the principal means by which cyber-criminals around the world distribute, store and launder the proceeds of their illegal activity."

The indictment said the company had more than a million users worldwide, including at least 200,000 in the United States, and virtually all of its business was related to suspected criminal activity.

The company's founder, Arthur Budovsky, was arrested, along with his deputy, Azzedine El Amine; co-founder Vladimir Kats, and two technology designers, Maxim Chukarev and Mark Marmilev. The two still at large are Ahmed Yassine Abdelghani and Allan Esteban Hidalgo Jimenez, who at various times managed the company's day-to-day operations. According to the indictment, almost all of the men used the alias, Eric Paltz.

According to the indictment, Liberty Reserve's currency unit was called the "LR." The company's users opened accounts at Liberty Reserve giving only a name, address and date of birth that the company made no attempt to verify. Once a user had a Liberty Reserve account, he or she could use cash to purchase LRs from third-party exchange merchants, which traded LRs with each other in bulk and charged fees to make the exchanges between LRs and hard cash.

Liberty Reserve users could transfer the digital currency units called LRs to each other, to be redeemed in different parts of the world for cash using the third-party exchange companies. The indictment said Liberty Reserve did not collect any banking or transaction information from the third-party exchange companies. It also let its users hide their Liberty Exchange account numbers when making transactions, which offered another opportunity for the users to mask their true identities.

The company processed around 12 million financial transactions per year. Since it began operating in 2006, the indictment said, Liberty Reserve laundered around $6 billion in criminal proceeds.

On Tuesday, the company's website, www.libertyreserve.com, displayed the message: "This domain name has been seized by the United States Global Illicit Financial Team."

It was not clear whether the people arrested in Spain and Costa Rica would be extradited to the United States or when the two people arrested in Brooklyn, New York, would appear in court.

A spokeswoman for the U.S. Attorney for the Southern District of New York declined to comment.

Regulatory obligations to combat money laundering have emerged as a major challenge to digital currency firms. The U.S. Treasury Department's anti-money laundering unit, the Financial Crimes Enforcement Network (FinCEN), issued guidance in March that labeled digital currency firms as money transmitters, thereby obliging them to enact anti-money laundering programs and register with FinCEN.

A top Bitcoin exchange, Mt. Gox, failed to register with FinCEN earlier this month and had its U.S. dollar accounts seized by authorities.

Over the past week, a Bitcoin unit has traded at around $130.