see post Fed Raids: Pertinent or Paranoid?
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Fed Raids: Pertinent or Paranoid?
It's no surprise that a great deal of lawmakers' time is spent reacting to advances in business and science. It's also no surprise that one of their popular tactics is to call on their promulgation agencies to bring scrutiny against any topic about which they're struggling to understand.
We're now seeing this applied against at least two e-currency operations.
One of them, Int Gold, saw their head offices in Texas raided by the Fbi in December. No arrests were made and no disclosures were presented to indicate the surmise for their actions. The only auspices mentioned were that they were pursuing an ongoing fraud investigation. It's now been over a month and nothing supplementary has happened.
At practically the same time, e-Gold was also served with a crusade warrant. It seems the justification was petty --- they assertedly didn't have a 'required' currency-exchange license --- and they were upset sufficient to place the following posting on their website:
e-gold® welcomes Us Government recapitulate of its status as a secretly issued currency
January 20, 2006
"Starting in mid-December 2005, Gold & Silver Reserve, Inc. (G&Sr), contractual Operator and primary dealer for e-gold, has been the subject of a warranted crusade of its premises and records, had its domestic bank accounts frozen, and been the target of a surely timed, extraordinarily misleading assault by a major firm publication.
"In an urgency hearing in Us District Court January 13, 2006, the ice order on G&Sr's bank accounts was lifted. Though numerous criminal claims had been made in obtaining the crusade and seizure warrants, the Government has not sustained these allegations and the only remaining claim is a contention that G&Sr has operated as a currency exchange without the allowable license. G&Sr had previously proposed to the Government that e-gold be classified for regulatory purposes as a currency, enabling G&Sr to register as a currency exchange. In a Treasury report released January 11, 2006, however, the division of Treasury reaffirmed their interpretation of the Usc and Cfr definitions of currency as excluding e-gold.
"G&Sr, for nearly a year, has been engaged with an division of Treasury in a Bsa (Bank Secrecy Act) compliance test it had voluntarily initiated. G&Sr, though preferring that the venue was not a courtroom, welcomes the opportunity to increase its discussions with the Government on how best to achieve acceptable statutory or regulatory cognizance of e-gold while lasting to build e-gold's store share as a medium of international commerce.
"Despite the unfounded charges and adverse misleading publicity that have severely damaged both e-gold and G&Sr, G&Sr has prolonged to meet all financial obligations and remain wholly operational. E-gold remains highly committed to its goal of bringing, for the first time in history, to habitancy of any financial means across the globe, a gather payment mechanism at a fraction of the cost of any other system. E-gold fully expects to transcend the unfortunate events of the past month and resume its exponential growth.
"Further information can be found at:
http://www.e-gold.com
[http://www.omnipay.com]
http://www.treas.gov/press/releases/reports/js3077_01112005_Mlta.pdf"
The proactive approach by e-Gold should be applauded. Int Gold should have done the same thing.
If more of the public only knew how many times crusade papers were served on financial institutions for one surmise or another, they'd no doubt be as skeptical as I am about the publicity the authorities have given their actions against these two e-currency companies.
Let's consider how authorities move against major banks when wrongdoing is suspected. One characteristic which becomes quickly obvious is that any releases issued by the investigating authorities have always been very definite in their nature, because major banks have sufficient financial and political clout to assault back at anything less.
An example of a surely identified transgression is the Citigroup incommunicable banking scandal in Tokyo in 2004. The Japanese authorities said the bank helped clients manipulate accounting records through improper real estate transactions, failed to process tax refunds for clients and mismanaged customers' confidential information. As a result, they ordered Citigroup's Japanese incommunicable banking operations to close, but took measures to ensure all unaffected investors would be minimally affected while they moved their accounts.
Rarely, total loss to depositors happens. The Silverado collapse in Colorado sent Charles Keating to prison for what should be a thousand life terms, as more habitancy than that lost their life savings. It's renowned that this occurred in what was a laissez-faire junk bond scenario.
Raids only receive mention when it serves the authorities' purposes to do so. One surmise for this is because the searches and/or seizures don't yield sufficient results to merit charges being filed. There can exist a vast gray area in contemporary financial activities, and when the fine print of a determined situation is scrutinized, it often occurs that, maybe those activities have sailed close to the legal wind, but they did not take the airs of disrepute.
It remains to be seen what they're investigating at Int Gold. As opposed to their medicine of major banks, the nature of the authorities' notification of this raid was quite vague, which I'm sure was by design. So, the issue is one of whom they were attempting to stir. However, American law says the parties involved are innocent until proven guilty, so they should duly be accorded that right. Until the entire story comes to light, it's improper to cast aspersions. After all, as with most raids at major banks that go unpublicized, it may be that the transgressor is not the company, but a client who has abused its privileges within that company's facilities.
The e-currency investigations are surely a result, in part, of one government's indecision as to how to regulate e-currencies within their borders when those currencies are neither fiat nor necessarily domiciled within those borders.
This reminds me of broadcasting's early days, when the Feds were perplexed about how to best cope with radio signals that only obeyed the laws of physics and thus had the ability to cross state lines without governmental permission. As ridiculous as that sounds today, the notion of a single technology being more developed than political and/or geographical delineations was of deep concern to them. It ultimately took nearly 15 years for the American government to generate the Federal Communications Commission to cope with such an 'advanced' firm as interstate broadcasting.
Given the fact that e-currencies are secretly generated and administered, and given that no central monitoring ideas exists to aid in their regulation, it is no surprise under the current environment of American laws to now see a bustle of authoritarian attention directed toward them. Until they are able to decree a palatable policy, the best they can do is assume a self-righteous position in the interests of 'consumer protection' and cast aspersions by means of rationalization. It's not particularly fair, but as we've seen in related online forums, it's quite effective.
Hopefully, the issue will be settled in a much more expeditious manner than it was in broadcasting.
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