E-gold Owners Plead Guilty To Money Laundering

Ian Lamont writes "The three owners of Internet currency service e-gold have pled guilty to money laundering in the U.S. District Court for D.C.. The service is based in the West Indies, but the directors apparently live in Florida. They haven't been sentenced yet, but potentially face decades in prison and millions in fines. In addition, the principal director posted a blog entry yesterday saying that 'criminal activity will not be tolerated,' and pledging to eliminate the loopholes that allowed money laundering to thrive on the service. He also claims that e-gold has more transaction volume in a single quarter than all of the first-generation Web currency services like Cybercash, Beenz, and Flooz completed over their lifetimes. Ironically, one of the reasons that contributed to Flooz's demise in 2001 was rampant money laundering."

Comments

Adventures In Proctology

[strelitsa]

I wonder if Douglas Jackson, Barry Downey and Reid Jackson will be able to buy a golden salve off the prison commissary that will help soothe their inflamed rectums after Bubba PENalizes them during their first night in the can? Kinda brings a new meaning to the phrase "Substantial penalty for early withdrawal"

Money has no value until it is spent

[LynnwoodRooster]

Currencies - paper, coin, gold backed, what-have-you - are simply placeholders in a barter system.

It used to be that I would trade a chicken for a few gallons of milk. I would take one of my chickens over to the rancher who would give me my milk, and I'd be on my way.

Well, essentially the same thing is happening now. I make widgets, and I am given a "barter paper" worth, say, one chicken. Now I go to the grocery store. He accepts my barter paper and gives me a gallon of milk. The grocer then trades that barter paper for the chicken to the rancher to get more milk.

Money has no value until it is spent; it is a placeholder only. Ultimately until it is used to consumer durable goods at the final user it simply exists to represent potential.

Gold, paper, whatever. Doesn't matter.

Zimbabwe, you say? The issue there is that the Government, via insane regulations, destroyed the economy. Suddenly you could NOT afford that gallon of milk, and the population was getting pissed.

So the Government decided to just start printing a bunch of barter papers without any real ground in what they represented. Pretty quickly the ranchers bumped the price of milk, and as they say we were off to the races.

As long as a currency system is tied to fundamental economic generation of durable goods (and services required to produce those goods), you can avoid the Zimbabwe meltdown.

The second you decouple from economic activity, though, is the second the barter paper becomes worthless - which are real, which are, effectively, counterfeit?