E-gold is a digital digital currency operated by Gold & amp; Silver Reserve Inc. (G & amp; SR) under e-gold Ltd. which allows users to open accounts on their websites in units of gold grams (or other precious metals) and the ability to instantly transfer value ("shopping") to other e-gold accounts. The e-gold system was launched online in 1996 and has grown to five million accounts in 2009, when transfers were postponed due to legal issues. At its peak in 2006, e-gold processed more than $ 2 billion spent annually, with a monetary base of only US $ 71 million (~ 3.5 metric tons), showing a high monetary turnover of about 28 times per year (for comparison, the speed per year USD is about 6 to M1 and less than 1.6 to M2). e-gold Ltd. founded in Nevis, Saint Kitts and Nevis with operations conducted in Florida, USA.
Video E-gold
Starter
E-gold was founded by oncologist Douglas Jackson and Barry Downey's lawyer in 1996. The couple initially supported the service account with gold coins deposited in bank vaults in Melbourne, Florida. In 1998, G & amp; SR (system operator) is a NACHA Affiliated Member and Full Member of NACHA's The Internet Council.
The company was launched two years before PayPal but did not show exponential growth until 2000. In 2004, there were over a million accounts. It was the first successful digital currency system to gain a user base and extensive merchant adoption, noting July 13, 1999 in the Financial Times as "the only electronic currency that has reached a critical mass on the web". It is also the first non-credit card payment service provider offering an application programming interface (API) that enables other services and e-commerce transactions to be built on it.
After the initial demonstration of e-gold Spend via Palm Pilot in February 1999, e-gold introduced support for wireless mobile payments.
E-gold is used by individuals and traders for services including metal trading, online merchants, online auctions, online casinos, political organizations, and nonprofit organizations.
From 1996 to 1999, currency exchange services known as "InExchange" and "OutExchange" were directly supported on the e-gold platform. This setting exposes the system operator, G & amp; SR, to the financial risks associated with the provision of exchange services. It also tends to inhibit third parties from offering exchange services on the basis of independent competition.
In 2000, the system was structured to segregate currency exchange activities from the core function of e-metal publishing and completion of transfers. G & amp; SR transferred ownership and liability for these core functions to e-gold Ltd., a newly established offshore company organized for a clear purpose. G & amp; SR itself, now an e-gold customer, continues to offer exchange services under the newly created OmniPay brand.
In the early spring of 2000, there was a proliferation of independent exchange services that marked the first emergence of an industry that provides exchanges between conventional national currency and personally issued brand money. In 2001, several dozen companies and individuals from around the world offered third party exchange services between the national currency and e-gold, further extending the international user base of e-gold.
E-gold, which allows transactions as small as ten thousandth of a gram of gold, is also the only successful micropayment system in the world. Company payments statistics are published live and show hundreds of thousands of micro transactions created daily by computer programs using the API.
Since its founding in 1996, e-gold pioneered the release of numeraire to establish payment instructions (Spend) from the original unit of the settlement currency account. For example, while AUGÃ,® (the trademark name for e-gold) is denominated in grams and decimal fractions (or in troy ounces since, as a unit of weight, both associated with fixed arithmetic ratios), the Spending Directive may be designated as "Pay [beneficiary account] e-gold worth 10 USD ". The calculation of the actual amount to be submitted is made using the table of exchange rates maintained by the company, which reflects the current actual exchange rates issued by the exchange provider.
In the early 2000s (decades), the capability of direct settlement, as applied by e-gold, was recognized as the key to the emergence of systems for peer-to-peer transfer of digital rights such as "smart contracts".
Government
E-gold was unique at the time because they created the "Special Purpose Trust e-gold" which holds the title for the physical bullion on behalf of the user. They also create a real-time statistics report page that shows the total holdings of each metal in a trust account, a list of gold bars with serial numbers, total number of accounts, as well as the total number and value of transactions in the previous 24 hours. This transparency allows many observations to be made about how e-gold is used.
Maps E-gold
Criminal harassment
The early success of E-gold may have contributed to its destruction. E-gold stores large value and user base making it an early target of financial malware and phishing scams by an increasingly organized criminal syndicate. The first known phishing attack on financial institutions was made against e-gold mailing list members in June 2001. This technique was complemented by attacks on digital gold systems such as e-gold and later used to attack other financial institutions from 2003..
Hackers
Failing to verify the identity of the account holders prospectively, e-gold began to suffer an increase in criminal activity primarily by Russian and Ukrainian hackers against its users. In addition to phishing, attackers make extensive use of weaknesses in Microsoft Windows operating systems and Internet Explorer web browsers to collect account details from millions of computers to compromise e-gold accounts.
Jackson's theory is that e-gold is a book entry system with account history, making it easy to conduct investigations to track and identify users who have been involved in forbidden activities after the fact. While the public perception is that the e-gold account is anonymous, the e-gold account is a disguise, allowing the account creator to use the name or label that he wants to use. However, account and transaction records - even failed log-in attempts - are recorded permanently, allowing connections from accounts that do not seem to be secretly linked under unified control. This data mining is enabled, combined with input from an independent exchange service, enabling law enforcement to identify many criminal users of the service.
Fraud
Various fraud artists from Western countries can also utilize the e-gold system as a means of funding their scheme, allowing for the first time in history, an international Ponzi scheme. Auction scam perpetrators on eBay will sell fake or non-existent items on the site. These criminal syndicates prefer their victims to pay for e-gold because this is the quickest and easiest way for them to move funds abroad.
The increase in online crime associated with e-gold caused a complaint to government authorities by defrauded account holders, who often did not understand the difference between e-gold and cheats or companies that encouraged them to open e-gold and wire accounts to fund it.
Systemic issues
As an online transaction system with exchange agents around the world, e-gold allows criminals and hackers in Romania to move money quickly and easily from victims in America back to the origin country the attack originated. Several cyber crime gangs are harassed and used e-gold based in RÃÆ'Â ¢ mnicu VÃÆ'Â ¢ lcea, Romania.
E-gold is not aware of part of a larger systemic problem with the banking system. The banking and credit systems in the United States are not designed for the digital environment, and are therefore essentially unsafe and highly vulnerable to identity theft and fraud checking, as well as confidence-based attacks such as phishing. The willingness of the credit card companies to allow people to apply for the card without being personally identifiable allows rapid growth of identity theft. (Ironically, not verifying the identity of the account holder will be one of the main criticisms filed against e-gold.)
Cybercrime
There are preliminary reports where e-gold actively helps catch and trap cyber criminals, such as the person who steals Cisco Systems firewall code and offers it for sale to be paid in e-gold. In June 2007, Jackson claimed to have "assisted 300 investigations and reported 3,000 suspected child pornography buyers to the National Center for Missing and Exploited Children". Goldmoney, and then federal law enforcement agencies began to characterize e-gold as the preferred payment system for criminals, terrorists and child pornography.
Criminal prosecution
Change the definition of money transmitter
The USA Patriot Act, passed after the September 11 attacks over five years after e-gold was launched, made it a federal crime to operate a money transmitter business without a state money transfers license in any state requiring licenses. At that time the money transmitters were in most countries defined as businesses that cashed in checks or received cash transfers to send from one person to another across international borders, such as Western Union or MoneyGram. For example, before 2010, California arranges money transmitters under "Transmission of Money Abroad Law". One of the e-gold competitors, the e-Bullion company, applied for a money-transfer license from the State of California in 2002, but was told by the State of California that their business dealing with gold accounts was not included in the country's definition of money transmitters.
In 2005, G & amp; SR requests that the IRS SB/SE Division conduct BSA Compliance Act compliance to clarify what rules, if any, e-gold fall. The US Treasury issued a report dated January 11, 2006 confirming that e-gold accounts were excluded from the definition of "currency" under the United States Congress and the definition of the Federal Regulatory Code.
However, in its action from 2006-2008, the US Treasury Department in conjunction with the US Department of Justice stretched the definition of money transmitters in the US Patriot Act to include any system that allows the transfer of any kind of value from one person to another. not just the national currency or cash. By using this new interpretation they then proceed to adjudicate the US-based gold system, e-gold (and then e-Bullion) under the US Patriot Act for not having a money transmitter license, even though these companies have previously cooperated with the authorities and said that they are not included in the definition of money transmitters. The allegation of not having a money transmitter license eventually fell against e-bullion. A few years later FINCEN expanded this definition to apply to foreign companies allowing US people to open accounts, forcing Jersey-based Goldmoney.com to suspend the ability to transfer value from one holder to another in December 2011.
An article in November 2013 at the Financial Times noted that "For several years, Jackson hoped to generate his own e-gold, but it became clear he would not be able to get the required money transmitter license in most countries. " US states. "
Allegations against e-gold
Banks suffer from similar problems with criminal activities, phishing, ponzi schemes and money laundering on a much larger scale, and some of the largest banks even consciously participate in money laundering. The status of e-gold as a controversial alternative currency system makes it an attractive target.
While e-gold has begun to implement stronger controls of system user abuse in 2005, and actively combating the use of its system for child pornography as a founding member of the Financial Coalition Against Child Pornography, the Department of Justice indicted gold's e-gold director on four counts of infringement money laundering rules and deliberately allow transactions to purchase child pornography. Government action against e-gold is the first impression case. As noted by the prosecutor, "Digital currency is at the forefront of international fund transfers.E-gold is the most prominent digital currency out there.It has the attention of the whole world of digital currency.The world is a bit wild in the west. people looking for what the rules are and what the consequences are. "
Resolution
The case against e-gold was brought under Title 18 USC section 1960 in UNITED STATES AMERICAN v. E-GOLD, LTD, District of Columbia court. e-gold filed a motion to close the case on the grounds that they did not fit the definition of the money transmitter. The court ruled against e-gold, stating that "a business can be clearly involved in the transmission of money without restricting its transactions into cash or currency and would commit a crime if done without a license." This ruling is enshrined in the case of law, the extension of the Treasury on the definition of a money transmitter to include any system with any value stored in any form may be transferred from one person to another, even if the value held is not cash, or national currency.
After vigorously opposing the allegations for a year, in July 2008 the company and its three directors signed a plea agreement. Dr Jackson pleaded guilty to "unauthorized money transmission business operations" and "conspiracy to engage in money laundering". This Agreement describes the actions necessary to bring the company into compliance with the laws and regulations governing the operation of the Money Transfer Business. At the same time, companies approve the approval of foreclosure orders, dropping their actions to recover funds previously seized by the government.
The penalty is scheduled to take 120 days after the entry of the Plea Agreement to obtain a 90-day interval to apply compliance requirements. Status reports detailing progress in relation to mandated compliance measures have been filed on November 8, 2008.
In November 2008, Gold & amp; Silver Reserve's CEO, Douglas Jackson, was sentenced to 300 hours of community service, a $ 200 fine, and three years of supervision, including six months of electronically monitored house arrest. He has faced up to a maximum of 20 years in prison and a $ 500,000 fine. Commenting on the substantial deviation from the Federal Penal Code (in the direction of leniency), Judge Rosemary Collyer, has noted "no doubt that Dr. Jackson respects the law" and that "the intent does not exist to engage in illegal behavior", determined: "no reason to turn off e-Gold and G & amp; SR, and every reason to make them obey the law ". Jackson's lawyer said Jackson avoided a heavier fines because he was deeply indebted - the judge said "Dr Jackson has suffered, will continue to suffer, and may never succeed with e-Gold". Reid Jackson, brother Douglas Jackson, and e-Gold director Barry Downey were each sentenced to three years probation and 300 hours of community service, and ordered to pay a $ 2,500 fine and a $ 100 valuation.
Service suspension and e-gold Value Access Plan (VAP)
The 2007 e-gold indictment was accompanied by a seizure (and forced smelting) of e-gold balance from several exchange providers, resulting in an almost overnight decline in the amount of e-gold in circulation (and gold reserves) from 3.5 to 2.6 metric tons. [No exchanger except G & amp; SR is accused of crimes and the value of confiscation is then returned to them.] In addition, the government filed a Post Restraining Order (PIRO) which prohibited the redemption of e-gold for gold bars without the consent of the prosecutor. The main purpose of PIRO is to prevent the spread of assets (gold reserves) that the government can not seize due to custodian arrangements in which the E-gold Bullion Reserve Special Purpose Trust has the right to gold.
The combination of adverse publicity and disrupted exchange markets led to a sharp decline in e-gold usage and demand. While under normal circumstances, a decrease in demand will lead to a decrease in circulation (without affecting exchange rates), this combination causes e-gold users can not redeem their e-gold with conventional money and does not encourage prospective recipients to receive payments. in e-gold.
In 2008, the Plea Agreement detailed requirements for e-gold to resume operations as regulated financial institutions. Although e-gold has fulfilled most of the requirements at the time of punishment, it is found that the guilty Plea itself effectively blocks the company (or any company controlled by e-gold directors) from obtaining licenses in any U.S. state. In accordance with Plea, e-gold suspends all remaining Shopping activity, which essentially locks all e-gold account balances.
The challenge is how to restore customer access to the value in their e-gold account. Lack of licensing as a money transmission business, any plan to liquidate the system and distribute value to customers would risk being interpreted as an additional violation of the operation without the required license.
In 2009, e-gold directors approached the US government with a proposal in which the government could serve as an intermediary to dilute the value of e-gold customers. After a year of negotiations, e-gold VAP approved calling for reserve monetization and claims mechanisms, under the authority and supervision of Judge Hollander. The VAP protocol requires companies to agree to voluntary assault actions from aggregate e-gold. The companies are then responsible for "monetizing" the value, that is, redeeming e-gold, liquidating the bullion released from the reserves and delivering the proceeds to the Secret Service.
Due to the decrease in the value of USD relative to e-gold, the net real monetization rate realized for VAP is $ 1583 per troy ounce, more than twice the maximum exchange rate of e-gold during the Expenditure Activity interval is limited and then suspended c. 2007-2009. Overall, G & amp; SR handed over $ 92.8 million to the Secret Service in 2012.
Some e-metals in e-Gold accounts are criminally handed down, but most e-metals are owned by innocent account holders. The court ordered Rust Consulting, a private company in Maryland, to process refunds to account holders after validating their identity with e-gold. Unclaimed funds balance will be forfeited to the US government. Three-month window set from June 3, 2013 to October 1, 2013 for e-gold account holders to file claims for their funds, then extended until 31 December 2013.
Aftermath
After the case of e-gold and e-Bullion, California (2010) and several other states changed their rules to follow a federal precedent to define all digital value transfer systems as money transmitters. However, the California 2010 legislation is the word to define various Internet startup companies, such as Airbnb's room booking service, as a "money transmitter".
E-gold is the earliest pioneer of Internet payments. The company is the first successful online payment system that pioneered many e-commerce systems and techniques, including making payments via SSL encrypted connections, and offering APIs to allow other websites to build services using the e-gold transaction system.
Although e-gold was eventually shut down by the US government, federal judges in the case ruled that the founders of e-gold "had no intention of illegal activity." After the settlement of a criminal case, e-gold Ltd director promises to resume operations after the new Federal knows your customer guide.
The failure of E-gold is ultimately due to their inability to provide a reliable user identification system and failure to provide a workable dispute resolution system to identify and bypass illegal and abusive activities within their user community. Other transaction systems such as Webmoney.ru and Goldmoney.com learn from e-gold errors and successfully implement systems similar to low-level abuse by addressing these shortcomings. Although PayPal has done a better job dealing with abuse than e-gold, they are now competing with similar internet fraud that undermines e-gold. Financial cryptographers have observed that Bitcoin has repeated the same basic mistakes made by e-gold, and that despite its decentralized nature, the wave of cyber crime can bring Bitcoin to a similar ending. According to the GoldMoney website, BitGold announced the acquisition of GoldMoney on May 22, 2015.
See also
References
External links
- Official website
Source of the article : Wikipedia
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