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E-gold Owners Plead Guilty To Money Laundering

timothy posted more than 5 years ago | from the laundering-is-just-a-bad-word-for-privacy dept.

The Courts 469

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."

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E-Gold... Why didn't I think of that? (5, Funny)

RandoX (828285) | more than 5 years ago | (#24289325)

Here I am, looking up "Money Laundering" in the dictionary trying to figure it out.

Re:E-Gold... Why didn't I think of that? (1)

AndyBassTbn (789174) | more than 5 years ago | (#24289743)

I tip my hat to you; I haven't laughed that hard at a movie reference in a long time.

Re:E-Gold... Why didn't I think of that? (1)

CodeBuster (516420) | more than 5 years ago | (#24290295)

mon.ey laun.der [muhn-ee lawn-der] - verb (used with object):

To conceal the source of money as by channeling it through an intermediary...

Re:E-Gold... Why didn't I think of that? (1, Funny)

Anonymous Coward | more than 5 years ago | (#24290579)

Times have changed. You should look up "Money Laundering" on Wikipedia instead.

e-Gold...teh new flooze? (-1, Troll)

Smidge207 (1278042) | more than 5 years ago | (#24289335)

*sigh* Why oh WHY was this blatant shit posted by timothy? His comments are - at best - a string of facile observations.

On top of that, I think most of you are aware of the controversy surrounding regular Slashdot article submitter D Ninja (aka Roland Piquepaille).

For those of you who don't know, please allow me to bring forth all the facts. Roland Piquepaille has an online journal (I refuse to use the word "blog") located at www.primidi.com. It is titled "Roland Piquepaille's Technology Trends". It consists almost entirely of content, both text and pictures, taken from reputable news websites and online technical journals. He does give credit to the other websites, but it wasn't always so. Only after many complaints were raised by the Slashdot readership did he start giving credit where credit was due. However, this is not what the controversy is about.

Roland Piquepaille's Technology Trends serves online advertisements through a service called Blogads, located at www.blogads.com. Blogads is not your traditional online advertiser; rather than base payments on click-throughs, Blogads pays a flat fee based on the level of traffic your online journal generates. This way Blogads can guarantee that an advertisement on a particular online journal will reach a particular number of users. So advertisements on high traffic online journals are appropriately more expensive to buy, but the advertisement is guaranteed to be seen by a large amount of people. This, in turn, encourages people like Roland Piquepaille to try their best to increase traffic to their journals in order to increase the going rates for advertisements on their web pages. But advertisers do have some flexibility. Blogads serves two classes of advertisements. The premium ad space that is seen at the top of the web page by all viewers is reserved for "Special Advertisers"; it holds only one advertisement. The secondary ad space is located near the bottom half of the page, so that the user must scroll down the window to see it. This space can contain up to four advertisements and is reserved for regular advertisers, or just "Advertisers". Visit Roland Piquepaille's Technology Trends (www.primidi.com) to see it for yourself.

Before we talk about money, let's talk about the service that Roland Piquepaille provides in his journal. He goes out and looks for interesting articles about new and emerging technologies. He provides a very brief overview of the articles, then copies a few choice paragraphs and the occasional picture from each article and puts them up on his web page. Finally, he adds a minimal amount of original content between the copied-and-pasted text in an effort to make the journal entry coherent and appear to add value to the original articles. Nothing more, nothing less.

Now let's talk about money. Visit http://www.blogads.com/order_html?adstrip_category [blogads.com] =tech&politics= to check the following facts for yourself. As of today, December XX 2004, the going rate for the premium advertisement space on Roland Piquepaille's Technology Trends is $375 for one month. One of the four standard advertisements costs $150 for one month. So, the maximum advertising space brings in $375 x 1 + $150 x 4 = $975 for one month. Obviously not all $975 will go directly to Roland Piquepaille, as Blogads gets a portion of that as a service fee, but he will receive the majority of it. According to the FAQ [blogads.com], Blogads takes 20%. So Roland Piquepaille gets 80% of $975, a maximum of $780 each month. www.primidi.com is hosted by clara.net (look it up at http://www.networksolutions.com/en_US/whois/index [networksolutions.com] . jhtml). Browsing clara.net's hosting solutions, the most expensive hosting service is their Clarahost Advanced (http://www.uk.clara.net/clarahost/advanced.php [clara.net]) priced at £69.99 GBP. This is roughly, at the time of this writing, $130 USD. Assuming Roland Piquepaille pays for the Clarahost Advanced hosting service, he is out $130 leaving him with a maximum net profit of $650 each month. Keeping your website registered with Network Solutions cost $34.99 per year, or about $3 per month. This leaves Roland Piquepaille with $647 each month. He may pay for additional services related to his online journal, but I was unable to find any evidence of this.

All of the above are cold, hard, verifiable facts, except where stated otherwise. Now I will give you my personal opinion.

It appears that every single article submitted to Slashdot by Roland Piquepaille is accepted, and he submits multiple articles each month. As of today, it is clear that ten articles were accepted in October, six in November, and four in December (so far). See http://slashdot.org/~rpiquepa [slashdot.org] [slashdot.org] for yourself. Some generate lots of discussion; others very little. What is clear is that, on a whole, this generates a lot of traffic for Roland Piquepaille. Just over 150000 hits each month according to Blogads. And the higher the traffic, the higher the advertisement rates Roland Piquepaille can charge. So, why do the Slashdot editors accept every single story from Roland Piquepaille? Is the content of his journal interesting and insightful? Of course it is, but not by Roland Piquepaille's doing. The actual content of his journal is ripped from the real articles, but at least he gives them credit now. Does the content of his journal bring about energitic discussion from the Slashdot readership? Yes, because the original articles from which he got his content are well written and researched and full of details.

So you may be asking, "What is so controversial about this?" Well, in almost every single article submitted by Roland Piquepaille, Slashdot readers complain that Roland Piquepaille is simply plaigarizing the original articles and that rather than linking to Roland Piquepaille's Technology Trends on the front page of Slashdot (guaranteeing a large amount of traffic for him), Slashdot should instead link to the original articles. In essence, avoid going through the middle man (and making money for him!). The Slashdot readership that can see through Roland Piquepaille's farce objects on the basis that he stands to make a generous amount of money by doing very little work and instead piggy-backing on the hard work of other professional writers. Others argue that he is providing us with a service and should not be ashamed to want to get paid for it. But exactly what service is he providing us with? He copies-and-pastes the meat of his journal entries from professional and academic journals and news magazines and submits about seven or eight of these "articles" to Slashdot each month. Is this "service" worth up to $647 a month? Or, does each "article" represent up to $80 of work?

The real question is, why does Slashdot continue to accept every single one of his submissions when many of the readers see through the scam and whole-heartedly object to what he is doing? Maybe the Slashdot editors don't have much journalistic integrity. Haha, just kidding. We all know they wouldn't know integrity if it bitch-slapped a disobediant user talking about Slashcode internals or shut down www.censorware.org [google.com] in a temper tantrum. Anyway, what incentive would Slashdot editors have to link to lame rehashes of original and insightful technology articles? What incentive would Roland Piquepaille have to constantly seek these tech articles and rehash them into lame journal entires and submit them to Slashdot? I submit to you, the Slashdot reader, that the incentive for each is one and the same. Now that you have been informed of the facts of the situation, you can make your own decision.

=Smidge=

Re:e-Gold...teh new flooze? (2, Informative)

clang_jangle (975789) | more than 5 years ago | (#24289735)

I know I'm feeding an OT poster, but I have the urge, so:

As of today, December XX 2004

So then, you've been reposting a post originally written nearly four years ago, just because it irks you that Roland is capitalizing on his /. submissions? You know, there are much more serious things to get worked up about, why don't you choose a few and make yourself useful? And FYI, you can aways go to your /. prefs page and opt out of RP's stories, and then you won't have to see them anymore.

Re:e-Gold...teh new flooze? (0)

Anonymous Coward | more than 5 years ago | (#24290161)

Does Slashdot add more value than $647 per month?

Re:e-Gold...teh new flooze? (0)

Anonymous Coward | more than 5 years ago | (#24290327)

who gives a fxxk?

haha (-1)

Anonymous Coward | more than 5 years ago | (#24289337)

trix are for kids mutherfucker!

It must be said (3, Funny)

xpuppykickerx (1290760) | more than 5 years ago | (#24289373)

We get caught laundering money, we're not going to white-collar resort prison. No, no, no. We're going to federal POUND ME IN THE ASS prison.

but... (1)

arcite (661011) | more than 5 years ago | (#24289681)

But they have conjugal visits right?...

Re:but... (3, Funny)

xpuppykickerx (1290760) | more than 5 years ago | (#24289733)

Conjugal visits? Mmmm. Not that I know of. Y'know, minimum-security prison is no picnic. I have a client in there right now. He says the trick is: kick someone's ass the first day, or become someone's bitch. Then everything will be all right.

Damn, was an easy way to buy gold... (4, Interesting)

Anonymous Coward | more than 5 years ago | (#24289391)

This royally sucks because e-gold was actually a very simple and easy way to purchase gold with very few and simple fees, and none of the tax burden.

Re:Damn, was an easy way to buy gold... (5, Insightful)

ScrewMaster (602015) | more than 5 years ago | (#24289457)

This royally sucks because e-gold was actually a very simple and easy way to purchase gold with very few and simple fees, and none of the tax burden.

Maybe that's another reason the Feds are going after them.

Re:Damn, was an easy way to buy gold... (0)

Anonymous Coward | more than 5 years ago | (#24289513)

Right because it makes perfect sense for someone to be taxed for transferring their currency to a commodity. With the dollar weakening daily, in order to prevent things from getting worse exponentially and folks outright abandoning the dollar in droves, they need to levy a penalty for "getting rid of" their dollar in exchange for something of actual value like gold.

So they tax the exchange. At least it isn't as bad as it was during the Depression. They made owning gold ILLEGAL back then. What a crock.

Instead of making their currency viable again, they just tax the crap out of anyone who wants to attempt to ditch it in favor of something stable.

Re:Damn, was an easy way to buy gold... (4, Insightful)

jcr (53032) | more than 5 years ago | (#24289717)

At least it isn't as bad as it was during the Depression. They made owning gold ILLEGAL back then. What a crock.

That ban was unconstitutional, of course. Not that that's stopped the federal government from doing whatever the hell they wanted since the Lincoln administration.

-jcr

Re:Damn, was an easy way to buy gold... (0)

Anonymous Coward | more than 5 years ago | (#24289781)

How I wish they hadn't taken us off the gold standard. It's only going to get worse, folks.

Re:Damn, was an easy way to buy gold... (1)

jmauro (32523) | more than 5 years ago | (#24290211)

I really think it all started to go downhill once we got off the sea shell [wikipedia.org] standard.

Re:Damn, was an easy way to buy gold... (1)

zippthorne (748122) | more than 5 years ago | (#24290385)

Yeah, if you liked mysticism, bloody tribal warfare, food storage issues, and a complete lack of public sanitation.

Re:Damn, was an easy way to buy gold... (0)

Anonymous Coward | more than 5 years ago | (#24290603)

actual value

I don't think it means what you think it means.

Re:Damn, was an easy way to buy gold... (5, Informative)

istartedi (132515) | more than 5 years ago | (#24290617)

You don't pay a tax for switching to gold. You only pay a tax on the CAPITAL GAIN you make if you sell at a profit. Your trading commissions and losses are actually DEDUCTIBLE.

Also, gold is no more fiat than anything else. Only 20% of it is put to industrial use. The rest is traded because people like it. If people stop liking it, down it goes. Think that can't happen? Think again. When the Conquistadors came to the West, Natives filled their coffers with gold on request. This was, only in part because they wanted to appease the Spaniards. Gold while attractive to them, was not monetary like it was in Spain. They valued jade (another scarce commodity) in that fashion. Had the Spaniards requested a room full of jade, it might have been another story.

Warren Buffet hit the nail on the head when he said: "It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

My own quote on the matter: "Under the current system money is managed by the Fed, which reports to Congress. Under a gold standard money is managed by international mining cartels and speculators. This is better, how?".

Then of course, there's the tendancy of gold standard advocates to ignore the history of business cycles under the gold standard (Hint, it wasn't a recession-free paradise). Why, praytell, have so many otherwise intelligent people been lured onto the gold bandwagon lately?

Hit the limit (5, Funny)

Jadware (1081293) | more than 5 years ago | (#24289393)

The police found out when their gold maxed to 2147483647. Everyone knows glitchers get caught.

Brilliant headline (-1, Offtopic)

oldhack (1037484) | more than 5 years ago | (#24289397)

No, didn't RTFA, and don't care if it's flamebating or what.

i can't believe (-1, Redundant)

Anonymous Coward | more than 5 years ago | (#24289423)

i can't believe im looking up money laundering in the dictionary

I can (0)

Anonymous Coward | more than 5 years ago | (#24289885)

I am guessing that you are part of the "no child left behind".

Re:I can (0)

Anonymous Coward | more than 5 years ago | (#24290155)

It's a line from Office Space, brighty. Turn in your geek card.

eGold now, Paypal next? (4, Interesting)

whoever57 (658626) | more than 5 years ago | (#24289431)

From TFA:

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.

Nw if the federal authorities could get the same concession from PayPal......

Re:eGold now, Paypal next? (5, Insightful)

stry_cat (558859) | more than 5 years ago | (#24289501)

Don't worry they will. e-gold was just smaller and didn't have good enough lawyers. Now that they've got a precedent set, the government will turn its attention towards paypal. The government can't stand to have any "unregulated" exchange of goods, services, or capital.

Re:eGold now, Paypal next? (1)

RandoX (828285) | more than 5 years ago | (#24289831)

Paypal could use some regulation.

PayPal IS registered... (3, Insightful)

nweaver (113078) | more than 5 years ago | (#24289879)

PayPal IS registered: See Paypal Liscencing page [paypal.com] .

Re:eGold now, Paypal next? (2, Interesting)

Timothy Brownawell (627747) | more than 5 years ago | (#24289887)

Don't worry they will. e-gold was just smaller and didn't have good enough lawyers. Now that they've got a precedent set, the government will turn its attention towards paypal. The government can't stand to have any "unregulated" exchange of goods, services, or capital.

I've seen advice to never leave significant amounts of money in a paypal account (or occasionally even a bank account that paypal knows about), because they occasionally lock it or take it away and make this hard to fix. Does this mean that these stories and whatever prompted them will go away?

Re:eGold now, Paypal next? (5, Insightful)

scipiodog (1265802) | more than 5 years ago | (#24289931)

Don't worry they will. e-gold was just smaller and didn't have good enough lawyers. Now that they've got a precedent set, the government will turn its attention towards paypal. The government can't stand to have any "unregulated" exchange of goods, services, or capital.

While I do agree with you, I think there's more to this than just regulation.

The US government (actually the Federal Reserve but by extension their lackeys in the government) is terrified of "competing currencies."

They come down especially hard on physical currencies, ie. Gold/Silver. Look at the recent attack on the "Liberty Dollar," for an example.

At the risk of provoking the ire of the anti-Ron Paul people, he's been talking about exactly this for some time.

Of course, it's quite possible that there actually was money laundering going on (it sounds like there was.) My point is just that these chaps weren't taken down because a) they were too small and didn't have good lawyers or b) just because they were laundering money. If you believe that, I've got a bridge I'd like to sell you...

Didn't think it would be too long. (1)

Colin Smith (2679) | more than 5 years ago | (#24290249)

"Let me issue and control a nation's money and I care not who writes the laws." -- Mayer Amschel Rothschild, 1790

 

Re:eGold now, Paypal next? (1)

Tubal-Cain (1289912) | more than 5 years ago | (#24289561)

Regarding your sig: I prefer the humor collection by a different Simon [theregister.co.uk]

Re:eGold now, Paypal next? (3, Informative)

tokul (682258) | more than 5 years ago | (#24289749)

eGold works with bogus money and is backed by claims of company that it has that amount of gold in safe. Gold standard died more than 50 years ago.

PayPal works with real money.

Re:eGold now, Paypal next? (2, Informative)

darjen (879890) | more than 5 years ago | (#24289811)

What do you mean, eGold works with bogus money? How is US currency "real money" any more than using gold as money?

Re:eGold now, Paypal next? (1)

rodrigoandrade (713371) | more than 5 years ago | (#24290487)

Maybe it's time you look up the definition of <URL:http://en.wikipedia.org/wiki/Legal_tender/>"legal tender."

Re:eGold now, Paypal next? (1)

Profane MuthaFucka (574406) | more than 5 years ago | (#24290615)

Notice the subterfuge. Parent poster shifted the word from eGold to gold. The answer is that eGold is made out of recycled electrons, and gold is gold.

Re:eGold now, Paypal next? (3, Insightful)

mea37 (1201159) | more than 5 years ago | (#24289869)

Now, I don't know how eGold operates, so there may be a valid point here that I'm not getting...

But I'm rather confused by what you say. Yes, the gold standard is dead -- that is, gold is not the underpinning of federal currency. However, it remains legal to trade in gold. You can even go to the bank and buy a gold coin (or several) if you care to. (Well, you can if you have that much money sitting around...)

So it's not clear to me what you're saying is wrong with eGold. They (claim to) hold assets in gold, and use that gold to back transactions... so what?

Re:eGold now, Paypal next? (1)

tokul (682258) | more than 5 years ago | (#24290357)

So it's not clear to me what you're saying is wrong with eGold. They (claim to) hold assets in gold, and use that gold to back transactions... so what?

Today's money is not backed by gold. Most of central banks stopped operating that way in 193x. If you keep money in bank, you get dividends. If you keep gold, you pay for storage. Keeping gold is profitable only when price of gold is rising and even then amount of gold you hold is decreasing with every minute, because holder must somehow cover storage costs.

I've tried to help one user, who wanted to pay for services with e-gold. It was very difficult to make payments. User had to go through several hops just to get some of that "gold". Some of sites listed as e-gold brokers were closed or their accounts were suspended. It looked fishy to me. Showing some photo or video and saying that it is gold. Gimme a break.

e-Gold might be popular only because some services that accept e-gold payments, don't accept standard credit card payments.

I am not saying that PayPal is better that e-Gold or USD. They are different and have different issues. e-Gold is a bit closer to being illegal and tries to use magic "gold" word to attract users. You wouldn't buy some map with sunken Spanish treasure fleet, right?

Re:eGold now, Paypal next? (0, Troll)

MrNaz (730548) | more than 5 years ago | (#24289949)

Actually, it's the US currency that's bogus, as is the case with any fiat currency. US dollars are backed by nothing but the whims of the federal reserve, and it's this very fact that has brought about America's current financial predicament.

E-Gold holds audited stocks of gold to the value of its deposits, which is a far safer store of wealth than the US dollar.

Re:eGold now, Paypal next? (1, Informative)

th1nk (575552) | more than 5 years ago | (#24290229)

US dollars are backed by nothing but the whims of the federal reserve, and it's this very fact that has brought about America's current financial predicament.

It is also the very fact that created the largest economy in the world and brought this country to where it is today...which really isn't all that bad of a place despite all the doom and gloom you hear in the media.

Re:eGold now, Paypal next? (4, Insightful)

Red Flayer (890720) | more than 5 years ago | (#24290461)

US dollars are backed by nothing but the whims of the federal reserve, and it's this very fact that has brought about America's current financial predicament.

Citation, please.

Some economists believe that America's current financial predicament was brought about by deregulation of the banking system, allowing banks to create currency by lending far more than they owned. Some economists believe that the current predicament is due to huge federal budget deficits. Some economists believe the current predicament is due to trade imbalance. I'm sure there are other theories out there.

However, a gold standard is not some magical cure to ecnonomic woes, it carries its own host of problems... and the biggest problem is that it removes the ability to correct for currency valuation issues.

E-Gold holds audited stocks of gold to the value of its deposits, which is a far safer store of wealth than the US dollar.

Gold is a commodity, and thus is not a safer store of wealth than currency -- if anything, it is less safe, since there are fewer controls over the world supply of gold then there are over the supply of currency. Apples to oranges -- one cannot compare a commodity to a currency, they are by nature two different things.

If you really want to consider the problems of a gold standard, look to history. There are reasons the gold standard was abandoned, and no protestations by any number of goldbugs will change the fact that a commodity-backed currency leads to frequent boom-and-bust cycles that are devastating to economies.

The current system is not perfect, but a commodity-backed currency is a nightmare we should not revisit.

Re:eGold now, Paypal next? (2, Interesting)

thealsir (927362) | more than 5 years ago | (#24290535)

And an effectively oil-backed currency is different how?

Re:eGold now, Paypal next? (2, Insightful)

prgrmr (568806) | more than 5 years ago | (#24290589)

PayPal works with real money.

PayPal works with electronic accounting. PayPal employees very most likely handle little, if any, of their customer's money at all. Any money handling is done at the incidental periphery of the transaction involving PayPal, but not by PayPal directly.

This was the heart of PayPal's defense in New York and Louisiana that they were not a bank, in part because they did not hold or handle customer's money directly.

Having said that, I think PayPal should be investigated for allowing fraudulent activity to pesist through their services. I don't have a PayPal account and refuse to.

US doesn't want anyone moving from the dollar (2, Insightful)

Anonymous Coward | more than 5 years ago | (#24289445)

They go after these egold folks and the liberty dollar folks because they don't want market forces to be able to leave the growing worthless dollar.

Also bet that Iran will be attacked not for WMDs but because they refuse to trade oil in dollars. These dollar monopolies are one of the few things propping up the dollar and allowing the warfare and welfare state to over-promise.

I bet the vast majority of these gold trades were not for child exploitation and laundering. They want to be able to run the printing presses 24/7 and they don't want anyone to be able to leave the US dollar.

Re:US doesn't want anyone moving from the dollar (1)

meringuoid (568297) | more than 5 years ago | (#24290425)

They go after these egold folks and the liberty dollar folks because they don't want market forces to be able to leave the growing worthless dollar.

I doubt either are significant. The market is abandoning the dollar in favour of the euro. I suppose the US could suspend convertibility of the dollar if they were concerned about that, or fix an exchange rate - but first they'd better ask Zimbabwe what happens when you start playing that game.

uh-oh (2, Funny)

jollyreaper (513215) | more than 5 years ago | (#24289511)

I heard a rattling in my dryer, opened it up and a quarter fell out. Does this mean I'll be doing a nickel upstate? I knew a guy doing a Susan B. Anthony for movie piracy.

Re:uh-oh (0)

Anonymous Coward | more than 5 years ago | (#24289565)

This was the most unfunniest thing I've read all day. Go sit in the corner. It's time-out for you.

Re:uh-oh (0)

Anonymous Coward | more than 5 years ago | (#24290465)

I once swallowed a nickel accidentally. I was shocked when I shit out five pennies.

Re:uh-oh (4, Funny)

Scutter (18425) | more than 5 years ago | (#24289573)

I knew a guy doing a Susan B. Anthony for movie piracy.

What, he was supposed to do 100 years, but only did 25 because the warden didn't look close enough?

Banks... (1)

billy901 (1158761) | more than 5 years ago | (#24289517)

Recently, in the last year and a half, bank are making you cough up a lot of ID just to get a simple GIC. I was pulling ID out of my ears to get a GIC at the CIBC, but they wouldn't let me until I had people I know and two pieces of government issued photo ID. The goal is to prevent money laundering. Not a bad idea for the owners of CIBC.

Re:Banks... (1)

ari_j (90255) | more than 5 years ago | (#24289567)

One of the biggest parts of the PATRIOT Act was to counter money laundering. Cash deposits over a certain amount, for instance, get handled differently in the USA this decade than they did in the past one.

On a side note: I missed the irony in Flooz's money laundering. Can anyone explain?

Re:Banks... (1)

billy901 (1158761) | more than 5 years ago | (#24289649)

I live in Canada though. We're not covered by the PATRIOT Act. It's more just the banks wanting to prevent money laundering in Canada when I put $7000 into a term deposit.

Re:Banks... (1)

ari_j (90255) | more than 5 years ago | (#24289837)

I just meant that by way of comparison, so you'd know that the US has been doing this by federal law for years and that you're not alone up there in Canadia. :)

Re:Banks... (1)

billy901 (1158761) | more than 5 years ago | (#24289943)

Sorry, it's snowing so hard I couldn't tell. :( I was just saying that a lot of places are going to extreme measures to prevent money laundering and it's really something that can't be prevented on the internet.

Re:Banks... (1)

ari_j (90255) | more than 5 years ago | (#24290245)

I hope you have a good toque, eh? And yes, I know what you mean - the US has been going to extreme measures for some time now. I wonder, though, why the Internet makes things all that much more difficult than, say, a bank in the Caribbean.

Re:Banks... (1)

Cormacus (976625) | more than 5 years ago | (#24289769)

Well, originally the article mentioned that e-Gold did better than its competitors, including Flooz. It was then ironic that they are having the same problems as Flooz, namely money laundering. However, it looks like the article has changed, removing all mention of the three competitor companies that it originally had. Can anyone else confirm this?

Ironic? (3, Insightful)

absent_speaker (905145) | more than 5 years ago | (#24289557)

"Ironically, one of the reasons that contributed to Flooz's demise in 2001 was rampant money laundering."

That's really just coincidental.

Re:Ironic? (1)

BalanceOfJudgement (962905) | more than 5 years ago | (#24289883)

"Ironically, one of the reasons that contributed to Flooz's demise in 2001 was rampant money laundering."

That's really just coincidental.

"Using a word in a way other than it's intended meaning - now that's IRONY!!" /Bender

Re:Ironic? (1)

Rude Turnip (49495) | more than 5 years ago | (#24290093)

I thought it was because they couldn't get a better spokesperson than Whoopi Goldberg to do their commercials.

Could someone IN the west indies step in plz? (1)

shaitand (626655) | more than 5 years ago | (#24289559)

Some of us really don't care about money laundering. Punish people for the crime or don't, money laundering is just one of a million charges they either get to pile on top, or slap on anyone didn't feel it was any of their concern how someone makes their money.

I am far more concerned about having a service for my finances that is not subject to the jurisdiction of the United States or any government

Re:Could someone IN the west indies step in plz? (1)

mr_mischief (456295) | more than 5 years ago | (#24289737)

Perhaps intentionally helping someone launder their money that you know is dirty should be a crime, since it's conspiracy to cover the trail of the original crime. Having a few people use your service who have dirty money without your knowledge probably shouldn't be.

Re:Could someone IN the west indies step in plz? (1)

gclef (96311) | more than 5 years ago | (#24289923)

Then how do you deal with the intentionally ignorant? (Ie, those who might be able to tell that they're being used to launder money, but refuse to look?) Is willful ignorance also illegal? At what point does that line get crossed where you "should have known?"

Re:Could someone IN the west indies step in plz? (1)

sakdoctor (1087155) | more than 5 years ago | (#24289779)

Electronic money is really fascinating from a cryptography point of view. I think that electronic money is necessary for the same reasons that encryption is necessary to enforce privacy of speech.

And like encryption, it's difficult to boot-strap for similar reasons that encrypted email isn't more widely used.

I couldn't care less about money laundering, but I do worry about the lead that the US is taking on telling people what they can and can't do with their stored value.

Re:Could someone IN the west indies step in plz? (2, Insightful)

numbsafari (139135) | more than 5 years ago | (#24290003)

Money laundering is a form of aiding and abetting a criminal act. It is basically a catch-all law for various kinds of fraud that are committed with the express purpose of hiding the source of funds either because they were illegally obtained or because they weren't declared for taxation purposes.

Very often when someone commits money laundering they are falsifying other financial documents in an illegal manner. Also, in many cases there are persons charged with money laundering who had nothing to do with the original commission of the source crime. So, it's not just a "pile on", very often its a specific act of fraud someone commits.

It's kinda unclear to me how this shouldn't be illegal. But then, based on the last sentence of your comment you seem to not believe in government and so there is no such thing as "illegal".

Adventures In Proctology (0, Offtopic)

strelitsa (724743) | more than 5 years ago | (#24289625)

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"

Re:Adventures In Proctology (-1, Offtopic)

strelitsa (724743) | more than 5 years ago | (#24289677)

Bad moderator, BAD. It wasn't off-topic.

Re:Adventures In Proctology (0, Troll)

strelitsa (724743) | more than 5 years ago | (#24290337)

Now that WAS off-topic. At least you're batting 50/50 now.

Osama bin Farmer (1)

wild_quinine (998562) | more than 5 years ago | (#24289755)

Remember kids, buying gold funds terrorism!

Will PayPal EVER have a real competitor? (0)

Anonymous Coward | more than 5 years ago | (#24289823)

Or have they been the only ones to slip under the fed's radar - operating like a bank but without the regulations (and security) of a bank?

Free Competition in Currency Act of 2007 (5, Informative)

bill_mcgonigle (4333) | more than 5 years ago | (#24289827)

Last year Ron Paul introduced the Free Competition in Currency Act of 2007 [loc.gov] which would make alternate currencies legal, though not change other aspects of what you can do with currencies (e.g. money laundering would still be illegal).

Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand. This gave the dollar real worth. Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes. As with any supply and demand equation, when they start running the printing presses to make more dollars, the dollars you have in you bank account become worth less. You're losing money value and the government is gaining money value, but your 'taxes' are low. One can see this in inflation charts which start to skyrocket in the 1970's, relative to decades previous. Interesting note: if we measured inflation today the way we used to back then, our inflation rate would be 11% [mcgonigle.us] .

The Wall Street Journal recently ran a graph showing the value of the dollar vs. gold vs. oil. If we look at the start of the decade until now, if we were holding euros instead of dollars, gas would only be about $2.70 at the pump - that extra $1.30 can be viewed as lost power of the dollar. But, the euro is no panacea either - if you compare the price of gas to the price of gold, it's nearly flat. How about $1.20 gas? I actually saw $5 diesel in CT last weekend.

Not surprisingly, the government decided to stop keeping track of 'M3' [capitalspectator.com] , or the money supply of the dollar recently. Private economists have continued the calculations [shadowstats.com] and it's easy to see why the government doesn't want to talk about it.

So, back to the beginning, the government has taken irresponsible action with the way it manages the value of its currency, and they have laws preventing people from opting out of their mismanagement. Afraid of a little competition, are they? Experience shows that the most likely effect of competing currencies, even ones that mimic the way the government operated in your parents' generation, would be to pressure the government to exercise some restraint. Of course, if this competition is illegal, they'll continue with their outrageous devaluation.

Folks who think a little competition helps to keep markets fair, and monopolies hurt them, would do well to contact their representatives in government about the aforementioned bill.

Re:Free Competition in Currency Act of 2007 (2, Insightful)

dpbsmith (263124) | more than 5 years ago | (#24289963)

"Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand..."

All that meant, of course, is that you could bring a dollar bill to the bank and get four quarters in change. Big deal.

You can still exchange your dollars for precious metal at the local coin shop, by the way.

Re:Free Competition in Currency Act of 2007 (2, Insightful)

numbsafari (139135) | more than 5 years ago | (#24290185)

Funny...

On a serious note: do we really want the tax dollars of our government being spent on maintaining and distributing massive amounts of gold so that ma an' pa can hide it under their bed?

Re:Free Competition in Currency Act of 2007 (2, Insightful)

Anonymous Coward | more than 5 years ago | (#24290089)

The problem with tying money to scarce resources is that it doesn't allow for any growth. To grow your economy, you have to first mine the gold, and then print the money. You have to pay the miners, of course, which means that over time, you'll use up all of the gold resources which are profitable. This isn't like oil, where consumption of the good forces more difficult extraction techniques to become profitable through sheer scarcity. Rather, in a system like this, you simply must not use up your gold, or else your currency strengthens to the point where you can no longer use it.

You eventually hit a plateau on your currency. Meanwhile, your population is expanding, new technologies are giving people new things to spend money on, and pretty soon, your economy implodes.

Worse, if we're trading with countries that don't use gold-backed systems, there are a whole slew of other problems.

That's not to say that the current system works--it doesn't. Eventually, the current system will break down, too. But going to a currency which is backed by precious metals is not going to help things, either. Economies need to be able to expand.

Re:Free Competition in Currency Act of 2007 (4, Insightful)

NeutronCowboy (896098) | more than 5 years ago | (#24290091)

You do realize that basing a currency on the supply of an arbitrary resource is just as foolish, if not more so?

The reason people abandoned the gold standard was because of two things:
- random hits to the valuation of a currency due to influx of more resources
- static size of economy.

People who pine for the days of the gold standard either never lived through the problems, or have forgotten all about them.

The reason people abandoned the gold standard (0)

Anonymous Coward | more than 5 years ago | (#24290459)

People never abandoned the gold standard. The government did. They find it more convenient to print money out of thin air for the guns and butter.

The fact that gold trading services have to be pounded into submission proves the people still have some love for currencies that have real value.

Those that had the biggest problems with the gold standard were the very same ones that benefit from a warfare-welfare state. Johnny Paycheck and those with most of their assets back accounts get the big screwover from inflation.

The main reason for commodity-backing of currency is to take the cost-free ability to print money out of thin air from governments that will always have an incentive to print more.

Re:Free Competition in Currency Act of 2007 (5, Insightful)

areReady (1186871) | more than 5 years ago | (#24290099)

A gold-backed dollar is every bit as illusory as a non-backed dollar. The only thing that makes ANY currency worth ANYTHING is that people are willing to accept it and be sure they will be able to spend it themselves. Gold is no more immune to this than paper dollars in the United States - unless the fact that gold is shiny and malleable makes it carry more intrinsic value. The only reason gold has any value is that we assign it value, which exactly why money has value.

People who think returning to a gold-backed dollar would be in any way useful lack some extraordinarily basic economic education. If we were sticking to gold-backed dollars right now, gold's value would plummet just as much as the dollar's.

Re:Free Competition in Currency Act of 2007 (1, Interesting)

fredrated (639554) | more than 5 years ago | (#24290305)

"The only thing that makes ANY currency worth ANYTHING is that people are willing to accept it"

Gold has been accepted by virtually all civilizations for thousands of years, probably because it can be worked, is beautiful, doesn't tarnish etc. I and many many others will take gold any day as it is more likely to keep its value than most anything else you can name.

Re:Free Competition in Currency Act of 2007 (1)

Sancho (17056) | more than 5 years ago | (#24290345)

Gold has intrinsic value in that it is useful. It's used in industry, for example. That, incidentally, makes it a terrible thing to back a currency on. Anyone with half a brain would know that backing a currency on oil, for example, would be foolish.

Paper money is only intrinsically useful to burn.

Re:Free Competition in Currency Act of 2007 (1)

thesaurus (1220706) | more than 5 years ago | (#24290577)

Gold is arguably not terribly useful, especially when compared to other metals (such as iron, which was used as currency in ancient Sparta) According to Wikipedia [wikipedia.org] , gold's advantage was that forgeries could be detected without destroying the object itself.

Re:Free Competition in Currency Act of 2007 (-1, Troll)

squarooticus (5092) | more than 5 years ago | (#24290347)

The key difference between the two, of course, is that gold/silver can't be arbitrarily created, while the US Treasury has an exclusive license to counterfeit the dollar, which it does with abandon. That is the reason why a commodity money is superior to paper currency.

Re:Free Competition in Currency Act of 2007 (1)

numbsafari (139135) | more than 5 years ago | (#24290137)

From the capitalspectator link:

So, in other words, inflation is only possible if the Fed allows it?
That's what I believe.

How can you possibly waste your time listening to these people?

Re:Free Competition in Currency Act of 2007 (2, Interesting)

u38cg (607297) | more than 5 years ago | (#24290209)

Pegging the value of money to the value of metal is stupid. Metal only has the value that we assign to it, and there's no practical difference between saying "This banknote is worth $1000" and "This piece of gold is worth $1000". As for the government printing money to pay its bills, look at Zimbabwe. Inflation, in small doses, is a good thing because it encourages you to use your money rather than hide it under the mattress where it loses value. And as for comparing inflation to serious decades, try going back several hundred or thousand years rather than basing them off the post-Depression years, and then talk to me about pegging currencies to precious metals.

Re:Free Competition in Currency Act of 2007 (5, Insightful)

dhovis (303725) | more than 5 years ago | (#24290237)

Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand. This gave the dollar real worth.

To paraphrase Terry Prachett [wikipedia.org] : "This was true, so long as nobody actually asked for it." The government NEVER had enough gold on hand to back every single dollar in circulation. The last time I had a friend insist that we should be on the gold standard, I did a quick back of the envelope calculation. If you took all the refined gold in the world, all of it, and used it to back the US dollar only, then the price of gold would have to skyrocket to something like $2,000/oz. This assumes that the price would not go up as you try to buy more gold. There simply isn't enough gold, and the rate of gold production was not keeping up with economic growth in the US and around the world.

Further, I don't understand people who think that the rate of inflation should be pegged solely to the rate of gold mining. Gold isn't particularly rare in the earth's crust, but it is costly to extract. If someone were to develop new technology that extracted gold at significantly cheaper prices, your currency would collapse. This isn't unprecedented. Remember that aluminum was once considered a precious metal until Charles Martin Hall [wikipedia.org] developed an inexpensive electrolytic process for extracting it. From what I hear, there is a new technology coming down the pipe to bring the price of extracting titanium down to the level of aluminum. If something similar happened to gold, a gold-backed currency would be destroyed. In an economy with a fiat currency, you'd just start using the new, cheap gold as a good roofing material.

Re:Free Competition in Currency Act of 2007 (5, Insightful)

barnackle (905200) | more than 5 years ago | (#24290261)

I know this is not the main thrust of the comment, but it's not practical for money to be backed by gold, diamonds, beads, or fragments of mirrors. Money is backed by what you can buy with it. Then, you say, "what if the economy collapses and no one trusts the dollar anymore?" Well, I don't know about you, but I can't eat gold. Or any other precious metal for that matter. "But you can use the gold to buy food." Ah, only because people trust gold as having value while paper money doesn't. Stepping back a step further, each seems to me to be about as useful as the other for its intrinsic physical properties.

But I got off track. The main reason precious metals don't make sense as money is the fact that they don't account for the growth of the economy. To simplify things, let's create a little thought experiment and take it to the extreme. What happens when there is no more gold left to pile up in Fort Knox? Does the economy stop growing at that instant? No. People continue to innovate and create value out of nothing using only their minds and bodies. What do we do then? Switch to another precious metal of which we have more? Switch to commodities?

Or we can just trust eachother. You make something cool and sell it to someone. I make something cool and you use the money you got in your last transaction to buy my cool thing off me. We're just bartering in a huge pool with a little bit of paper to smooth the process.

To address the concerns of the last poster, all we can do is try to be as transparent as possible. And even then, the economy knows what's happening. The government increases the money supply and the inflation numbers will show it, whether they tell us or not. Just like with anything else we buy and sell. Increase supply and the money value of each individual unit drops.

Re:Free Competition in Currency Act of 2007 (1)

squarooticus (5092) | more than 5 years ago | (#24290433)

To simplify things, let's create a little thought experiment and take it to the extreme. What happens when there is no more gold left to pile up in Fort Knox? Does the economy stop growing at that instant? No. People continue to innovate and create value out of nothing using only their minds and bodies. What do we do then? Switch to another precious metal of which we have more? Switch to commodities?

Of course not: each bit of gold/silver simply buys more stuff.

Now that I've explained the obvious, a good followup question is: is this a bad thing? I don't think so, but I also think gradual deflation is better than massive inflation: the rate of deflation with gold as the money supply is limited to the rate at which gold can be mined (slow), while the rate of inflation with paper currency is limited only by the rate at which some douchebag at the Treasury can create bits in a computer system (fast and potentially disruptive).

In reality, the rate of growth in the gold supply has mirrored the rate of growth in global wealth pretty well: about 1.5% per year. As the price of gold rises, you can expect more supplies to come online as it becomes economically viable to dig them out of the ground.

Re:Free Competition in Currency Act of 2007 (5, Informative)

Anonymous Coward | more than 5 years ago | (#24290267)

Last year Ron Paul introduced the Free Competition in Currency Act of 2007 which would make alternate currencies legal, though not change other aspects of what you can do with currencies (e.g. money laundering would still be illegal).

This is the sort of meaningless drivel that marks Ron Paul and his supporters as kooks.

Today, you are most certainly not obliged to use US dollars. You can use any currency you wish, provided the other party in the transaction agrees. You can take payments in beans, Swiss francs, gold or oil. Many US banks are happy to let you have an account in a foreign currency.

The only case where you are required to take US cash is for payment of a USD debt (that's the "legal tender" statement you see on USD bills).

In US states near the Canadian border, you will often see Canadian quarters, nickels & dimes, since they look very similar to US coins and have almost exactly the same value (1 USD is about 1 CAN).

Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand.

So? Why is gold valuable? It does have some intrinsic industrial value, but the majority of the price of gold is because people think it's valuable. Why do they think it's valuable? Because it's pretty and shiny and people think it's valuable. It's self-fulfilling. It's valuable because people think it is. The degree to which people think something is valuable varies from time to time. iphones seem to be the currency of choice these days.

The gold standard does prevent some economic problems from occurring, but causes many others. These are well known and have been studied to death by economists.

Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes.

Government mismanagement & incompetence is not something that only occurs with fiat money.

Re:Free Competition in Currency Act of 2007 (1)

i_ate_god (899684) | more than 5 years ago | (#24290309)

I thought the Federal Reserve controls the currency (hence why dollars are legal "tender" now) and it's a corporation unrelated to the government.

PLS.STOP.WHINING. It's 9,6 USD/gallon in Denmark.. (0)

Anonymous Coward | more than 5 years ago | (#24290387)

and in much of the EU. Did I hear whining over 5USD/gallon? Over 4 USD also?

Yes, most of it is government tax. We don't like it either.

Re:Free Competition in Currency Act of 2007 (1)

Tangent128 (1112197) | more than 5 years ago | (#24290395)

So how is gold any better? It's a good connector plater, and that's all the intrisic value I can think of.

Today, the dollar is backed by the force of US law. In the days of the gold standard, it was backed by people liking shinyness. How does either give the dollar "real worth"?

Re:Free Competition in Currency Act of 2007 (1)

gandhi_2 (1108023) | more than 5 years ago | (#24290467)

One of the things that killed the gold standard was that farmers depended on inflation to subsidize their debt-based operating model.

The Wizard of Oz was a populist allegory about staying with the gold standard (yellow brick road, Oz (ounce), etc.)

Re:Free Competition in Currency Act of 2007 (1)

Watson Ladd (955755) | more than 5 years ago | (#24290497)

You can denominate a contract in whatever currency you want.

Ironically (0)

Anonymous Coward | more than 5 years ago | (#24289829)

Ironically, the author doesn't know what irony is.

Re:Ironically (1)

stoofa (524247) | more than 5 years ago | (#24289999)

That's maybe because the eGold was purified and so had no irony deposits in it at all.

If you didnt RTFA... (5, Interesting)

carp3_noct3m (1185697) | more than 5 years ago | (#24290005)

E-gold is an online currency service that is backed up by gold. You cannot buy directly from them though, you have to buy through a redistributor, some of which are questionable and only takes certain forms of payment. The nature of the having a third party buy from egold and then sell to another person creates a web of denial effect for money launderes. One of the largest schemes e-gold is used for is in the credit card theft hacker rings, where it is easy to get credit card info, it is harder to "cash out". This is where "cashiers" come in, usually charging a 50 point take on cashing out for someone else. Egold, since it was in a different country, denies US Government requests for transaction records for accounts. E-gold may be in trouble, but for every e-gold there is another replacement, e-platinum, webmoney, and large handful of others. Oh yeah, btw, I didnt RTFA either, I just thought Id share what I know about e-gold, and I might be wrong about some of it.

I occasionally leave my wallet... (0)

Anonymous Coward | more than 5 years ago | (#24290127)

I occasionally leave my wallet in my pants when I do washing... does this count as "money laundering"? That's why I'm posting as AC...the gov't might come after me.

Good riddance! (2, Interesting)

swordgeek (112599) | more than 5 years ago | (#24290169)

e-gold has tried spam as a marketing tool. When they stopped that, other spammers started following suit, phishing for account info--and e-gold's response was always "it's not our problem."

They've been actively aiding money laundering, and claiming they can't control what their customers do. Even now, Douglas Jackson is talking about fixing the flaws in an otherwise good system--despite the fact that he's likely going to jail for a few years.

e-gold is a dirty operation run by dirty crooks. It should be buried deep underground, and the gold reserves (if they really exist) used for something constructive.

Where's the anon online cash, then? (4, Interesting)

BenEnglishAtHome (449670) | more than 5 years ago | (#24290183)

For whatever reason, there are times when people pay cash and have no desire to reveal who they are to the folks with whom they are doing business. (I used to relish, back in the day, going to Radio Shack and refusing to give them my zip or other information as long as I was paying cash. They thought I was weird. I thought being forced to identify myself to buy batteries was just too stupid to put up with.)

So is there any way to anonymously pay for things online? I can think of only one: buy a pre-paid credit card for cash and use it online. Non-reloadable gift cards can be purchased for cash and activated for use online under any name you can think up; there's no verification.

However, that method is inconvenient. Do the slashdot hordes know of a better, easier way that remains anonymous?

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