[e-gold-list] Re: e-gold pleads guilty of money laundering charges

[Pete Chown]

Larry Nieves wrote:

> «E-Gold, an Internet-based payment service, and three owners have
> pleaded guilty to criminal charges related to money laundering, the U.S.
> Department of Justice said Monday.»

There is a post on the e-gold blog about this, too:

http://blog.e-gold.com/2008/07/a-new-beginning.html

The blog post forgot to mention the guilty pleas, instead saying that the 
criminal case had been "resolved".  In their own interest, e-gold should 
stop spinning like this; we will find out what really happened soon 
enough.  It's frustrating because I really believe that the e-gold 
founders are honest, and the guilty pleas don't change that.  There is no 
need for spin, we are perfectly capable of distinguishing between you and 
the criminals who used e-gold in spite of your efforts.

I would hate to think of any e-gold founders getting the sentences the 
DoJ talk about, so I hope the case has in fact been resolved, by a plea 
agreement that avoids anyone doing jail time.

It's also interesting that, because of the guilty pleas, the questions 
about the definition of money are still not resolved.  Citibank is a 
money transmitter because it transfers dollar balances.  E-gold is a 
money transmitter because it transfers interests in gold.  Well, a 
jeweller's shop also transfers interests in gold -- is that a money 
transmitter?  What about eBay, which transfers interests in all sorts of 
things?

> From a first read it appears the gov guys don't want to shut down
> e-gold, but to put it under the same regulations all banks operate.

Yes and actually I think this could help e-gold become more mainstream.  
Revolutions are unusual, at least in the West.  Western societies tend to 
change by baby steps, and they are changed by people who are close to the 
political consensus.

Imagine a scenario where people wish to invest in gold, as a hedge 
against the bad economic situation.  Here is e-gold, now with government 
approval and hence the approval of people who trust the government.  They 
invest through e-gold -- but then they find that they can spend it 
without converting it back to dollars first...

A few questions regarding the blog post:

1.  What happens to the accounts that were frozen over the past couple of 
years?  In particular, do the 1MDC people get their money back?  While 
1MDC was probably too anonymous for the government's liking, it also paid 
the e-gold storage fees, and that probably attracted a lot of perfectly 
honest users.

2.  The change to the e-gold user agreement has a mistake, doesn't it?  
It says I can't use e-gold in a way that violates the laws of my 
jurisdiction.  Surely you also want to prohibit uses of e-gold which 
violate American law.  I'm sure you don't mean to say that I, as a Brit, 
can use e-gold in a way that violates American law -- provided I obey 
English law.

3.  I like the idea of having one login but multiple accounts.  As well 
as making the system more resistant to abuse, it will make multiple 
accounts more convenient to handle.  However, how will you deal with 
accounts that are legitimately shared?  For example, suppose I had a 
private account, and also access to the account of an unincorporated 
society.  The society account might need to be accessible to other 
committee members, but my personal account would be restricted to me.  
Will there be a mechanism allowing an e-gold account to be attached to 
two logins?

4.  Will corporations have their own login, given that they have separate 
legal personality, or will their accounts be attached to the logins of 
their officers?  To my mind, the latter would make more sense, because 
otherwise the officers are forced to share one password.  (They would be 
forced to share one password under the present system, I suppose, but 
this seems sub-optimal.)

Good luck!

Pete



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