e-gold
e-gold was a digital gold currency operated by Gold & Silver Reserve Inc. (G&SR) that allowed users to make payments, which it called "spends", in grams of gold, silver, and other precious metals. e-gold was launched in 1996 and grew to five million accounts by 2009, when transfers were suspended due to legal issues. At its peak in 2006, e-gold processed more than US$2 billion worth of spends per year,[1] backed by over US$85 million worth of gold, about 3.8 tonnes (8,400 lb).[2] e-gold Ltd. was incorporated in Nevis, Saint Kitts and Nevis, and its operations were based in Florida.
Beginnings
e-gold was founded by Douglas Jackson, an
By 1998, G&SR was an affiliate member of NACHA[5] and a full member of NACHA's Internet council.[6] The company experienced exponential growth starting in 2000.[7] In a July 13, 1999 article in the Financial Times, Tim Jackson (no relation to Douglas) described e-gold as "the only electronic currency that has achieved critical mass on the web".[8][9] In 2001, the company said that e-gold had more than 200,000 accounts and more than $14 million of digital gold currency in circulation.[10] By 2004, there were over a million accounts.[11]
By the early 2000s, the capability of immediate settlement, as implemented by e-gold, was recognized as key to the emergence of systems for peer-to-peer transfers of digital rights such as "smart contracts".[12]
e-gold was a founding member of the Financial Coalition Against Child Pornography.[13][14] In 2005 and 2006, the company took effective action to combat child exploitation.[15]
Criminal abuse
e-gold was a target of financial malware and phishing scams by criminal syndicates and was used for illegal activities. In December 2005, the Federal Bureau of Investigation (FBI) raided G&SR's offices, seizing files and hardware, as part of an investigation into e-gold's use in criminal activities. A month later, no charges had been filed against Jackson or his businesses.[16]
Hackers
Because of e-gold's hard money and non-repudiation policies, it was an early and particularly attractive target of phishing attacks against its users.[17][18] Attackers also exploited flaws in the Microsoft Windows operating systems and Internet Explorer web browser to collect account details from millions of computers to compromise online accounts, including e-gold accounts.[19][20] In the first half of 2004, e-gold implemented one-time passwords to improve its security.[17]
Jackson said that e-gold is a book entry system with account histories, making it possible to identify users who had engaged in illicit activity.
Fraud
In a lengthy article in
The Western Express Cybercrime Group, a five-man fraud syndicate based in Eastern Europe, engaged in carding, selling illegally obtained goods and using e-gold and other digital currencies to store the proceeds.[23]
Prosecution and closure
In 2007, a U.S. federal
Reid Jackson, Douglas's brother, and Barry Downey, a company director, were each sentenced to three years of probation and 300 hours of community service, and ordered to pay a $2,500 fine and a $100 assessment.[26]
e-gold's plea agreement included a forfeiture of about $1.2 million to the government, a $300,000 fine, and a condition that Douglas Jackson impose know your customer (KYC) rules on e-gold customers. Customers who lived in high-risk countries or who had not completed KYC verification were limited to low or no transaction rates.[2] e-gold announced a claims process in December 2010, and launched it in June 2013, for account holders to access the funds they had deposited. As of November 2013, users could not use e-gold's web site for other purposes.[27] Jackson told the Financial Times in a November 2013 article that he had hoped to resurrect e-gold himself, but that he had not been able to obtain the licenses required in most US states.[28]
See also
- Digital currency
- Digital currency exchanger
- Gold as an investment
- Liberty Reserve
References
- ^ "e-gold Statistics". 2006-11-09. Archived from the original on November 9, 2006. Retrieved 2014-12-19.
- ^ a b c Zetter, Kim (June 9, 2009). "Bullion and Bandits: The Improbable Rise and Fall of E-Gold". Wired. Retrieved October 23, 2022.
- ^ "archive.org capture of e-gold Director bios page". 2004-10-14. Archived from the original on October 14, 2004. Retrieved 2014-12-19.
- ^ "Synopsis of e-gold Transactions". Gold & Silver Reserve, Inc. Archived from the original on June 27, 1998. Retrieved 8 January 2015.
- ^ "archive.org capture of NACHA Affiliates listing, circa 1998". 1998-07-09. Archived from the original on July 9, 1998. Retrieved 2014-12-22.
- ^ "archive.org capture of e-gold homepage, circa 1998". 1998-06-27. Archived from the original on June 27, 1998. Retrieved 2014-12-22.
- ^ "list post, March 4, 2001". talk.e-gold.com (independent discussion list). 2001-03-04. Retrieved 2014-12-20.
- ProQuest 248786094. Retrieved August 19, 2023.
- ^ "Developments in the Law Concerning Stored Value Cards and Other Electronic Payments Products, footnote 154". Maurer School of Law: Indiana University, Law Journal. 2007-01-01. Retrieved 2014-12-20.
- ProQuest 387947777. Retrieved August 21, 2023.
- ^ "archive.org archive". 2004-07-11. Archived from the original on July 11, 2004. Retrieved 2014-12-20.
- ^ Mark Miller (2002-12-17). "The Digital Path: Smart Contracts and the Third World". Archived from the original on December 17, 2002. Retrieved 2015-01-12.
- ^ "Sites selling child porn targeted". 2006-03-16. Retrieved 2023-08-19.
- ^ "Financial and Internet Industries to Combat Internet Child Pornography". 2007-07-13. Archived from the original on 2007-07-13. Retrieved 2023-08-20.
- ^ a b "DELETING COMMERCIAL PORNOGRAPHY SITES FROM THE INTERNET: THE U.S. FINANCIAL INDUSTRY'S EFFORTS TO COMBAT THIS PROBLEM". www.gpo.gov. U.S. Government Printing Office. Retrieved 8 January 2015.
- ^ ProQuest 239413686. Retrieved August 21, 2023.
- ^ a b "Financial Cryptography: e-gold stomps on phishing?". www.financialcryptography.com. Retrieved 2023-08-19.
- ISBN 978-1-137-56869-4.
- ^ "[e-gold-list] Large Criminal Hacker Attack on Windows NT E-Banking and E-Commerce Sites". Mail-archive.com. 2001-03-08. Retrieved 2013-09-20.
- ^ "Three organisations targeted by email scams". The Sydney Morning Herald. December 17, 2003. Retrieved October 23, 2022.
- ^ "e-gold Blog: Buy Online Privately (but not Anonymously) with e-gold". Blog.e-gold.com. 2007-09-12. Retrieved 2013-09-20.
- ^ Dowd, Kevin. "Contemporary Private Monetary Systems" (PDF). www.kevindowd.org. Kevin Dowd. Archived from the original (PDF) on 8 January 2015. Retrieved 8 January 2015.
- ^ Eligon, John (September 1, 2009). "Five More Accused in Credit Card Fraud Investigation". The New York Times. Retrieved October 23, 2022.
- ^ Sullivan, Bob (May 2, 2007). "Feds accuse E-Gold of helping cybercrooks". NBC News. Retrieved October 23, 2022.
- ^ Zetter, Kim (July 25, 2008). "E-Gold Founder Pleads Guilty to Money Laundering". Wired. Retrieved October 23, 2022.
- ^ a b Stephanie Condon (2008-11-20). "Judge spares e-Gold directors jail time". CNET.
- ProQuest 1532503869. Retrieved October 23, 2022.
- ^ Stephen Foley, November 28, 2013 E-gold founder backs new Bitcoin rival, Financial Times