The unexpected about-face in the e-gold money laundering trial prompted a wave of online discussion about the guilty pleas and e-gold's pledge to clean up the Web currency service and submit to U.S. regulatory oversight. The Industry Standard conducted an email interview with Mark Herpel, who has been writing about the e-gold case since the company was charged with money laundering last year. Mark is editor of Digital Gold Currency Magazine and a critic of excessive government oversight of online currencies.
The Industry Standard: Is money laundering a problem for e-gold, as portrayed by U.S. prosecutors?
Mark Herpel: Not anymore! Seriously, money laundering is a big problem for all financial industries and ours is no different. For more than a decade the business has been unregulated, or, as some claim "self-regulated." It's truthful to say that some DGCs [digital gold currencies] have seen more than the usual amount of fraud and financial crimes, but this [state of affairs] is quickly changing for the better.
There is a new report out by the U.S. Department of Justice entitled "Money Laundering in Digital Currency" which we are discussing in this next issue of DGCmagazine. The report highlights several very specific problem areas across the digital currency spectrum where improvements could be made. It also states the obvious in the last paragraph -- "U.S. regulatory action alone will not be sufficient to suppress the money laundering threat posed by digital currencies." Consequently, it's also obvious from that report what the government does not know about digital currency systems.
The Standard: How will the new steps e-gold is taking impact the service, and its reputation among e-gold members?
Herpel: The new beginning as outlined by Dr. Jackson should save the local DGC industry in the United States by regulating it, controlling the participants and generally turning e-gold into something like "GoldPal" a highly controlled and monitored Web business.
It's good to see but as anyone knows, PayPal is widely misused and hacked, so even with strict PayPal-type U.S. regulations some fraudsters are still bound to misuse any online payment system.
Let me make one thing perfectly clear: The e-gold business survived, it's a better Internet model than anything else out there in the U.S., and should flourish. This change is a very good thing for U.S. users. The U.S. needs an easy-to-use precious metals Web site where the average Joe can easily buy gold and have a store of value -- away from low-interest banks and IndyMac-type situations.
e-gold should be a big hit in about six months and we are all pleased to see the business has survived this massive government action. We all also pray that none of the e-gold defendants will have to serve any jail time.
The Standard: How will e-gold's competitors react?
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