Everyone’s Been Waiting For - E-gold’s Verdict
(Digital Money World) The verdict is out. E-gold loses the case to the US government. A surprise?
A trial court in the District of Columbia, 2008 U.S. Dist. LEXIS 37602, UNITED STATES OF AMERICA v. E-GOLD, LTD, et al., for violation of 18 USC 1960 which makes it a crime to operate an unlicensed money transmitting business. According to the trial court, a business can clearly engage in money transmitting without limiting its transactions to cash or currency and would commit a crime if it did so without being licensed. ” The Court rejected the claim that 18 USC 1960 does not apply to their operations because they never deal in cash or currency.
Last year, the DOJ announced Indictment of E-Gold as follows: “A federal grand jury in Washington, D.C. has indicted two companies operating a digital currency business and their owners on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today. The four-count indictment, handed down on April 24, 2007, and unsealed today, charges E‑Gold Ltd; Gold & Silver Reserve, Inc.; and their owners Dr. Douglas L. Jackson, of Satellite Beach, Fla.; Reid A. Jackson, of Melbourne, Fla.; and Barry K. Downey, of Woodbine, Md., each with one count of conspiracy to launder monetary instruments, one count of conspiracy to operate an unlicensed money transmitting business, one count of operating an unlicensed money transmitting business under federal law and one count of money transmission without a license under D.C. law.”
Which means either e-Gold could re-appeal or think of some further alternatives. According to subject matter expert Mark Herpel, we could possibly see many other DGCs take stances on dropping US customers on whole or applying for licences (end of privacy yea?)
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4 opinions for Everyone’s Been Waiting For - E-gold’s Verdict
E-gold Loses - What Next? — No Bullshit Investment Community
May 15, 2008 at 8:54 am
[…] get the latest from us. Should you have any questions, feel free to email JudeBig news, check out Benson’s Digital Money World on the verdict by the Courts. A trial court in the District of Columbia, 2008 U.S. Dist. LEXIS […]
Jon A
May 15, 2008 at 10:48 am
I can’t see why offshore digital currencies would need or want to drop their U.S. customers. E-gold is an unusual case: even though it is technically offshore (the parent company is domiciled on the island of Nevis), its real owners and operators (Dr. Jackson et al) are located in the U.S. and thus sitting ducks for prosecution by U.S. authorities. Even the computer servers, I believe, are on U.S. soil. If the servers and the owners/operators of e-gold were located outside U.S. jurisdiction, they would be untouchable by U.S. authorities. There would be no reason for them not to allow U.S. citizens to use their services–or for that matter, for them even to track where their users are physically located.
The real problem for digital currencies isn’t the functioning of the currency itself, but rather the exchange process.
Some day, perhaps, when digital currencies have gained much broader acceptance, it will be possible to trade them directly for a wide variety of goods and services. Until then, however, a digital currency’s viability in the marketplace will be determined by the ability to exchange it for “real” money: especially dollars, but possibly also euros, yen, or other convertible currencies.
Somebody has to provide an exchange service. But that somebody, unlike the digital currency itself, cannot exist in isolation on some offshore island; rather, at the very least, the exchange service must have access to the banking system in order to receive and disburse “real” money.
And there’s the rub. Long before the court ruling on e-gold, U.S. authorities have been picking off the exchangers one by one like ducks in a shooting gallery at a carnival. The real question to ask, therefore, isn’t “will U.S. authorities be able to forbid or eliminate digital currencies” (they won’t), but rather, “will U.S. authorities be able to criminalize and destroy the business of exchanging digital currencies for U.S. dollars” (quite possibly).
There is a peculiar irony in this. Exchangers don’t “transmit” money at all. Rather, they simply buy and sell a somewhat nebulous product (a legally probably unenforceable claim on genuine or bogus precious metal evidenced by a few electrons on a disk at an undisclosed location) in exchange for cash. There is no reason why this should be illegal as long as the exchangers are up-front about what buyers are getting in return for their money. Nonetheless, because exchangers are the Achilles heel of the system, the Feds go after them with a vengeance.
It would be interesting to see if someone with a money transmitting license (e.g. someone who operates a currency exchange in the U.S.) can or will become a dealer in digital currencies. Such an individual would have to adhere by strict “know your customer” guidelines, i.e. they would have to require proof of identity from all customers and to keep it on file.
(Such an exchanger, however, would have no way of knowing where his customers’ digital currency came from, or where they intended to spend it. Then again, dealers in gold coins don’t know where sellers got their coins, or what buyers intend to do with them.)
Does anyone know if this is feasible? I believe that the future of digital currency in the U.S. is dependent on the possibility of such exchange businesses existing on U.S. soil.
JoseLeon
May 15, 2008 at 12:14 pm
Can you tell us the link to know the sentence?
Thanks Benson.
Jose
E-gold Loses - What Next? » Earn Money Internet
Jul 13, 2008 at 7:13 am
[…] Loses - What Next? Big news, check out Benson’s Digital Money World on the verdict by the Courts. A trial court in the District of Columbia, 2008 U.S. Dist. LEXIS […]
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