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