The Major Flaw with the Feds on E-gold
(Digital Money World) This doesn’t deserve to be on the comment. DGCMagazine, Mark Herpel’s view of the current e-Gold situation and how flawed the US law system is on digital money. Its an aces.
The problem is multi-faceted and it not coming as a one big bright idea or even have one identifiable date. The big problem is sneaking up like a thief in the night.
The e-gold legal matter is not over and there was no verdict yet, but there may as well have been. The meat of the case from e-gold POV is that moving digital units back and forth which are backed by allocated bullion, and never accepting ANY cash or national currency simply can’t be money transmitting…how do you transmit money without even have a bank account? This is NO part of the Federal Banking system like a Western Union or MoneyGram and I agree. This is a closed end accounting program where digital units move back and forth.
That law came into effect after 9/11 when it was found one of the bad guys received funds via a Hawala…ie cash goes in one side—there is a phone call—and cash comes out the other side= Hawala , hence–>Money Transmitting. So a pretty good part of the case is “..we are not MTs” I agree.
What just happened is the Judge, submitted a legal opinion to the court saying that e-gold’s business DOES fall into the category of Money Transmitter and they need a license to do business. E-gold says, NO, and now, the government Judge has submitted her opinion that they YES need the license, have needed it for some time and will need it today.
May 8, 2008, Decided
May 8, 2008, Filed
U.S. Dist. LEXIS 37602http://obtainingforeignevidence.blogspot.com/2008/05/international-crimes-e-currency-subject.html
A similar thing happened to PayPal back in I think 2003. Right before their public offering, the State of LA said, “Hey, even though you don’t think so….you need a MT license because you have LA customers” Well not willing to blow their offering, they complied and have done so with all US States that require the lic. since then. Now its more then just getting a license, you must also now operate within their guidlines, KYC, AML SARs etc. When they took over the e-gold servers the first time, the State of FL said, you need the license and e-gold said, “No” so now what you have is the Federal District of Wash, DC saying you need the license and the Judge actually publishing the opinion that YES you do and did years back also….and were committing a crime operating without it.
Several problems here, (1) This is the first judge ever having this or any other opinion on the e-gold business so its going to be challenged-appealed-vigorously fought in court as long as e-gold’s money lasts. (2) With this new legal item, can e-gold continue to operate today and through their legal challenge without the licensing? (that’s the rub) The judge has now said, “You should have the license to operate” are they still allegedly breaking the law today without it? (3) With that new information, are all DGCs now ‘operating without this license’ and will a similar fate await all of them with US clients? If Pecunix or Webmoney has a client in Washington or any other US State do they now need that same license?
If you have a client in California, you need the CA license. Same for every State, so will DGCs now or sometime soon either have to get this licensing and operate under the strict KYC/AML rules like PayPal OR will they just have to ban US customers and IPs…..like online gambling?
The new Judge’s opinion, if it stands up, seems to force DGCs to be MTs and either get licensed or get out of the US. This is the big issue and can they today operate legally while the issue is being worked through in the courts. So has e-gold LOST? It’s not good, but its not yet over and if they lose the challenge, all DGCs with US clients could be losers. Dr. Jackson was and still is a real pioneer.
What happens next? Well probably nothing while it works its way through the court as the US is very slow and would just rather kill DGCs than fight through the courts. My guess is that 2-3 years will go by without hearing much else on the licenses while the government creates more criminal charges for e-gold unrelated to the licensing. I would not be surprised to see a RICO charge coming soon including exchange agents. It’s very sad
Mark
DGCmagazine
Very sad indeed.
