Will Egold be closed down?

By | May 10, 2007

About two weeks ago, E-Gold owners were served an indictment by the US Federal Government on charges of conspiracy in money laundering and illegal operations. E-Gold is one of the biggest payment processors on the Web, and serves mainly people from countries that cannot use Paypal.

It should be noted “an indictment is merely an accusation, and the defenders are presumed innocent unless and until proven guilty”.

Although many people who conduct business on the Web do not use E-Gold, there are still many that do. The news came as quite a surprise to me because E-Gold has been online for a long time already (like a decade), and all this while was allowed to operate quite freely.

E-Gold is run by Gold and Silver Reserve Inc, and uses its own private currency in the form of its own gold reserve. Basically, people transact by buying a certain amount of gold from E-Gold and then using the gold as digital currency to perform a transaction with another party that accepts E-Gold. E-gold contends that the E-Gold user is better protected from currency swings because of the stable nature of gold price and value.

Although I have never used E-Gold myself, I have some online friends and aquaintences that did, and the only requirement needed to open an account was a valid email address. Payments with E-Gold were anonymous and irreversible. This probably was a weakness in the system because it seems many illegal businesses and terrorist funded syndicates could in theory open mutiple accounts at E-Gold using many email addresses and then use their accounts to launder money, away from the prying eyes of law enforcement agencies.

What I know is, lots of GRQ pyramid and HYIP schemes operate with E-Gold, and since E-Gold transactions are irreversible, if you lost money, there was no way to recover it back. So in this sense, yes it is risky.

If E-Gold is allowed to stay up after this saga is over, it will very likely become a much more regulated establishment, thus once again limiting a lot of people from non Paypal countries from being able to transact online easily, and further strengthening the hand of PayPal indirectly.

Although I don’t use it, I hope E-Gold doesnt get shut down. A good question to ask would be, “Is PayPal free from fraudulent activites?”. I don’t think so either; fraud can exist everywhere and anywhere, in various shades and guises. Just look at the mounting Ebay scams reported everyday.

Currently, “E-Gold date closure speculation” is making the rounds, with people who are convinced that E-Gold will be closing, now trying or at least contemplating to sell off their E-Gold stocks, while those who don’t think it would close, are hoping to acquire E-Gold stocks at bargain prices. On the E-Gold website, E-gold founder Dr Douglas Jackson has put up a denial statement page to counter the indictment charges.

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