Bleg: Liberty Reserve and "Cloud Based Servers"

By Paul Rosenzweig
Wednesday, May 29, 2013, 12:49 PM

As many of you might have read, the Department of Justice announced a large scale money-laundering indictment against Liberty Reserve yesterday.  I will have some analysis of this development (and the related demise of BitCoin) once I've had a chance to think this through some more -- though the national security implications of a separate monetary market seem palpable.  For now, however, I would like to request some information and assistance from the Lawfare readership.  Can anyone help me understand this passage from the DOJ press release:

Officials said the case was a series of firsts for U.S. authorities. In addition to being the largest international money-laundering case brought by the Justice Department, it involved the first search warrant executed by American officials against a cloud-based server. Bharara said 30 search warrants were executed during an 18-month investigation.

What does the bolded text mean?  Surely it does NOT mean that DOJ has never served a warrant on a service provider who uses a cloud based architecture to control access to its servers.  After all, we know that many service providers configured in that way (Google, Microsoft, Amazon) routinely respond to search warrants.  So, does it mean that the servers used by Liberty Reserve were some virtualized construct resident in a distributed way across the hardware component?  But would this really be the first time such a construct was searched?  And is the distinction meaningful -- aren't the underlying hardware components still resident somewhere (whether in the US, Costa Rica or elsewhere)?  And if that is the case, where was the warrant issued, served and executed?

I am, quite honestly, confused by all of this --  so if any readers have a better guess (or real knowledge) please let me know.

BTW, for those who are curious a "bleg" is a portmanteau word combining "blog" and "beg" to denote an instance where a blogger begs his readership for assistance.  I suppose "blask" was too harsh a construct!