In a move that might rattle investors with bullish tendencies toward the popular and often wildly volatile electronic currency Bitcoin, on Tuesday Costa Rican, Spanish, and U.S. authorities arrested a number of individuals in connection with the lesser-known digital currency exchange called Liberty Reserve.

Authorities froze bank accounts and websites associated with the exchange, and Liberty Reserve’s founder Arthur Budovsky was apprehended in Spain. U.S. prosecutors filed an indictment accusing the website of running a 1 million user-strong money laundering scheme, the majority of whose dealings were connected to criminal activity of some variety.

In early March of this year, Bitcoin received an avalanche of scrutiny when the value of one unit of its algorithmically printed currency began skyrocketing. Indeed, the rise was phenomenal, reaching over $220 in April before settling more or less to its current value of approximately $128.

At the time, much was made of the fact that the inherently anonymous way in which Bitcoins were exchanged held limitless possibilities for the world’s black market economies. At the same time, Bitcoin was already being accepted as legitimate tender at popular websites like Reddit and WordPress, and in late February Mt. Gox, the world’s largest Bitcoin exchange moved to legitimize itself through a partnership with the Silicon Valley Bank Coinlab, ostensibly bringing it under the jurisdiction of U.S. anti-money laundering and know-your-customer regulations.

Even still, the U.S. Treasury Department’s Financial Crimes Enforcement Network has been scrutinizing virtual currencies with greater interest recently; in March it classified exchanges like Mt. Gox and Liberty Reserve as money transmitters and forcing them to register, as well develop anti-laundering programs. When Mt. Gox failed to register recently, its U.S. accounts were seized.

Liberty Reserve did not benefit from the same, albeit begrudging, legitimacy that all the media attention seemed to give to Bitcoin and the several well-established exchanges that trade it.

Liberty Reserve exchanged units called LRs, and according to the indictment filed against it today, allowed users to open accounts with nothing but an unverified name, address, and date of birth. Prosecutors are alleging that the site has helped criminals launder more than $6 billion world-wide since 2006 through over 12 million transactions per year.