| Business always moves faster than government | | | | releases issued by the investigating |
| ... It's no surprise that a great deal of | | | | authorities have always been very specific in |
| lawmakers' time is spent reacting to advances | | | | their nature, because major banks have enough |
| in commerce and science. It's also no | | | | financial and political clout to strike back |
| surprise that one of their favorite tactics | | | | at anything less. An example of a precisely |
| is to call on their enforcement agencies to | | | | identified transgression is the Citigroup |
| bring scrutiny against any topic about which | | | | private banking scandal in Tokyo in 2004. The |
| they're struggling to understand. We're now | | | | Japanese authorities said the bank helped |
| seeing this applied against at least two | | | | clients manipulate accounting records through |
| e-currency operations. One of them, INT Gold, | | | | improper real estate transactions, failed to |
| saw their head offices in Texas raided by the | | | | process tax refunds for clients and |
| FBI in December. No arrests were made and no | | | | mismanaged customers' confidential |
| disclosures were presented to indicate the | | | | information. As a result, they ordered |
| reason for their actions. The only auspices | | | | Citigroup's Japanese private banking |
| mentioned were that they were pursuing an | | | | operations to close, but took measures to |
| ongoing fraud investigation. It's now been | | | | ensure all unaffected investors would be |
| over a month and nothing further has | | | | minimally affected while they moved their |
| happened. At roughly the same time, e-Gold | | | | accounts. Rarely, total loss to depositors |
| was also served with a search warrant. It | | | | happens. The Silverado collapse in Colorado |
| seems the justification was petty --- they | | | | sent Charles Keating to prison for what |
| allegedly didn't have a 'required' | | | | should be a thousand life terms, as more |
| currency-exchange license --- and they were | | | | people than that lost their life savings. |
| upset enough to place the following posting | | | | It's notable that this occurred in what was a |
| on their website: e-goldÂ(R) welcomes US | | | | laissez-faire junk bond scenario. Raids only |
| Government review of its status as a | | | | receive mention when it serves the |
| privately issued currency January 20, 2006 | | | | authorities' purposes to do so. One reason |
| "Starting in mid-December 2005, Gold & Silver | | | | for this is because the searches and/or |
| Reserve, Inc. (G&SR), contractual Operator | | | | seizures don't yield sufficient results to |
| and primary dealer for e-gold, has been the | | | | merit charges being filed. There can exist a |
| subject of a warranted search of its premises | | | | vast gray area in modern financial |
| and records, had its domestic bank accounts | | | | activities, and when the fine print of a |
| frozen, and been the target of a precisely | | | | certain situation is scrutinized, it often |
| timed, extraordinarily misleading attack by a | | | | occurs that, perhaps those activities have |
| major business publication. "In an emergency | | | | sailed close to the legal wind, but they did |
| hearing in US District Court January 13, | | | | not take the airs of disrepute. It remains to |
| 2006, the freeze order on G&SR's bank | | | | be seen what they're investigating at INT |
| accounts was lifted. Though numerous criminal | | | | Gold. As opposed to their treatment of major |
| claims had been made in obtaining the search | | | | banks, the nature of the authorities' |
| and seizure warrants, the Government has not | | | | announcement of this raid was quite vague, |
| sustained these allegations and the only | | | | which I'm sure was by design. So, the issue |
| remaining claim is a contention that G&SR has | | | | is one of whom they were attempting to stir. |
| operated as a currency exchange without the | | | | However, American law says the parties |
| proper license. G&SR had previously proposed | | | | involved are innocent until proven guilty, so |
| to the Government that e-gold be classified | | | | they should duly be accorded that right. |
| for regulatory purposes as a currency, | | | | Until the entire story comes to light, it's |
| enabling G&SR to register as a currency | | | | improper to cast aspersions. After all, as |
| exchange. In a Treasury report released | | | | with most raids at major banks that go |
| January 11, 2006, however, the Department of | | | | unpublicized, it may be that the transgressor |
| Treasury reaffirmed their interpretation of | | | | is not the company, but a client who has |
| the USC and CFR definitions of currency as | | | | abused its privileges within that company's |
| excluding e-gold. "G&SR, for nearly a year, | | | | facilities. The e-currency investigations are |
| has been engaged with an agency of Treasury | | | | surely a result, in part, of one government's |
| in a BSA (Bank Secrecy Act) compliance | | | | indecision as to how to regulate e-currencies |
| examination it had voluntarily initiated. | | | | within their borders when those currencies |
| G&SR, though preferring that the venue was | | | | are neither fiat nor necessarily domiciled |
| not a courtroom, welcomes the opportunity to | | | | within those borders. This reminds me of |
| extend its discussions with the Government on | | | | broadcasting's early days, when the Feds were |
| how best to achieve appropriate statutory or | | | | perplexed about how to best cope with radio |
| regulatory cognizance of e-gold while | | | | signals that only obeyed the laws of physics |
| continuing to build e-gold's market share as | | | | and thus had the ability to cross state lines |
| a medium of international commerce. "Despite | | | | without governmental permission. As |
| the unfounded charges and adverse misleading | | | | ridiculous as that sounds today, the thought |
| publicity that have severely damaged both | | | | of a particular technology being more |
| e-gold and G&SR, G&SR has continued to meet | | | | advanced than political and/or geographical |
| all financial obligations and remain | | | | delineations was of deep concern to them. It |
| completely operational. e-gold remains highly | | | | ultimately took nearly 15 years for the |
| committed to its goal of bringing, for the | | | | American government to create the Federal |
| first time in history, to people of any | | | | Communications Commission to cope with such |
| financial means across the globe, a secure | | | | an 'advanced' business as interstate |
| payment mechanism at a fraction of the cost | | | | broadcasting. Given the fact that |
| of any other system. e-gold fully expects to | | | | e-currencies are privately generated and |
| transcend the unfortunate events of the past | | | | administered, and given that no central |
| month and resume its exponential growth. | | | | monitoring system exists to aid in their |
| "Further information can be found at: The | | | | regulation, it is no surprise under the |
| proactive approach by e-Gold should be | | | | current environment of American laws to now |
| applauded. INT Gold should have done the same | | | | see a bustle of authoritarian attention |
| thing. If more of the public only knew how | | | | directed toward them. Until they are able to |
| many times search papers were served on | | | | determine a palatable policy, the best they |
| financial institutions for one reason or | | | | can do is assume a self-righteous position in |
| another, they'd no doubt be as skeptical as I | | | | the interests of 'consumer protection' and |
| am about the publicity the authorities have | | | | cast aspersions by means of rationalization. |
| given their actions against these two | | | | It's not particularly fair, but as we've seen |
| e-currency companies. Let's consider how | | | | in related online forums, it's quite |
| authorities move against major banks when | | | | effective. Hopefully, the issue will be |
| wrongdoing is suspected. One characteristic | | | | settled in a much more expeditious manner |
| which becomes quickly evident is that any | | | | than it was in broadcasting. |