Liberty Reserve is an online payment system and provider of digital gold currency (LR-gold). They are an offshore company incorporated in Costa Rica, launching their USD backed digital currency (LR-USD) in 2002 and they also have a Euro backed digital currency (LR-EUR). Their gold backed digital currency was launched in 2008. Liberty Reserve is a member of the Global Digital Currency Association (GDCA), a voluntary regulatory body in the industry.
Liberty Reserve's web site suffered a massive DDoS attack since May 1, 2008 according to the information provided on their blog. It's not the first time the site has come under a DDoS attack, the blog talks also about implementing a permanent solution to the problem.
In December of 2008, a hacker gained access to the Liberty Reserve system. Over a three month period the hacker removed over $1 million dollars from customer accounts and cashed those digital funds out into national currency. In March the Liberty Reserve web site went offline for several days to seal the open access which allows the hack and stolen funds. Several account holders now claim to be seeking legal action.
And to answer you question, they have been in business for a long time and are used by businesses which aren't able to be a PayPal or Moneybookers customer. Often they do payments for Gaming, Shady MLM and all this stuff.