Logo for the e-gold website.

e-gold is a private digital currency founded in 1996 by Dr. Douglas Jackson and Barry K. Downey that facilitated the transfer of gold between members of their website instantly using modern technology. e-gold is unique from historic alternatives to federal currency in that it is purely digital in nature and that the transactions were completely irreversible.


Although the website was likely started with benevolent intentions, it quickly became a haven for criminals. The irreversibility of the gold transfers made e-gold an indispensable tool for money launderers, identity thieves, fraudulent “financial” investors, and purchasers of child pornography. Furthermore, the irreversibility of e-gold transactions left one without remedy when one’s account was compromised by hackers or phishers leaving a victim. By 2006, e-gold’s corporate governance realized that the website was being used for non-trivial illegal activities and began blocking accounts. CEO Douglas Jackson released the following statement, “e-gold operates legally and does not condone persons attempting to use e-gold for criminal activity. e-gold has a long history of cooperation with law enforcement agencies in the US and worldwide, providing data and investigative assistance in response to lawful requests.”


Soon after in 2007, the U.S. government mandated e-gold to block several e-gold accounts running services similar to e-gold before indicting e-gold of several criminal activities. The crux of the argument against e-gold was that e-gold did not do enough to prevent illegal activity, by not having a mechanism in place that stopped fraudulent users from just creating new accounts and transferring their e-gold to these new accounts. There was also the issue of e-gold being an unlicensed money transmitting business even though it was not transferring money, per se. Money transmitting businesses are required under U.S. law to receive a license to do so which comes with keeping certain legal information on the users that create accounts. e-gold met neither requirement. Unfortunately for e-gold, the court found in UNITED STATES OF AMERICA v. E-GOLD that “a business can clearly engage in money transmitting without limiting its transactions to cash or currency and would commit a crime if it did so without being licensed” and thus ruled against e-gold. In addition the creators of e-gold were found guilty on similar charges including conspiracy. However, the legal consequences to the company and the corporate governance were relatively light and e-gold was able to work out a negotiation with the federal government that allowed legitimate users to retrieve their funds form their accounts, similar to online poker.


e-gold still technically remains in business today, but is no longer accepting new accounts or transfers of e-gold from user to user.

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