Some thoughts about e-gold... | Ecommerce Journal

July 23, 2008 - 1:13pm

So it happens that it is not the first time we cover e-gold problem on the pages of our journal. Not sooner had the hype with the fake press release about the bankruptcy of e-gold simmered down, then new shocking news has struck the public. According to the press release issued by usdoj.gov e-gold was again charged with money laundering and unlicensed money transmitting business. Due to the last news e-gold today is the most discussed topic on all forums.

Unfortunately it happened so that all the recent events as well as the reaction of the e-gold admins coupled with the situation on the market have undermined the authority of this giant which is more likely to be called with a prefix “ex-“. Even Douglas Jackson, the CEO of e-gold, admits this fact: “e-gold's failure to emerge so far is a result of many factors but the root causes were design flaws in the account creation and provisioning logic that led to the unfortunate consequence of vulnerability to criminal abuse. Criminal abuse of the e-gold system, in turn, led to a self-reinforcing negative reputation.”

First of all, all that troubles made the authorities of e-gold to think hard about their policy and to make some changes which however did not please everybody. The blocking of the accounts has put the users of e-gold against the system. The transparency of operations also didn’t excite those who prefer the anonymity of the transactions. e-gold though has another point of view: “In harmony with this transformation, we acknowledge that e-gold is indeed a Financial Institution or Agency as defined in US law and should be regulated as a Financial Institution. E-gold Ltd. has submitted an application to FinCEN to be registered as a Money Services Business and will be seeking licensure in all states that require it. Most importantly, working in conjunction with US government agencies, we will be exerting every effort to bring e-gold into compliance with US law and regulation as quickly as possible.”

It is necessary to note that before the last post Douglas Jackson was a rare guest in e-gold’s blog. The only exception was August 2007 when the CEO was philosophizing about the money. It is also important to note that it was the first time Jackson had apologized to the users for the inconvenience… and has announced the changes in the policy of the system.

First of all the changes touched the main document, a “constitution” of the system – User Agreement, where they have spelled out all the points that could protect the system against the charges of money laundering indulgency and violation of the law.

Another innovation is "one-human being/one e-gold User" rule that exclude the creation of multiple accounts. Only validated Users will be empowered with the ability to create multiple accounts.

At the moment all the attempts to create a new account in e-gold end on the page https://www.e-gold.com/newacct with a phrase “New account creation temporarily suspended”

The only answer from e-gold was: “The advantage from the cybercrime-thwarting standpoint will be an ever-stronger ability to blacklist a person who has abused the e-gold system. e-gold is intensively working on this next generation User-based log-in system but it is likely to be another 6-9 months to deployment.”

But who knows whether the users will be patient enough and wait those 6-9 months, and where is the guarantee that e-gold will still be alive???