At the risk of sounding controversial, I am making public a view I have long held before now: e-gold has a magnet for attracting criminals. I would proceed to explain.
e-gold’s anonymity feature, which e-gold Ltd sees as one of its most important features is indeed a dream come true for all sorts of criminal-minded entities: money launderers, credit card fraudsters, hackers, ATM stealing schemes, child porn gangs, fraudulent HYIP websites, and now kidnappers asking for a ransom.
In all fairness, e-gold emphasises privacy and not anonymity: According to its 10th anniversary press release:
e-gold is about privacy, but it is not anonymous. e-gold Users can be assured that their online transactions are private, but those who may wish to hide illicit transactions should know they are not anonymous. e-gold’s advanced investigative protocols will identify and stop illicit users.
Being truly global, high level of security and low transaction fees attracted me to e-gold more than 5 years ago but not its privacy feature. Alertpay, Moneybookers and Paypal all require a vigorous background check for customers to transact above a certain limit and I do not have a problem with that. So who needs privacy anyway?
Whether its privacy or anonymity, it is a problem for e-gold and e-gold has been attempting to reverse this ugly trend for several months now with little success. Criminals still rely on e-gold and some online businesses like EasyDNS have stopped using e-gold entirely. Its brush with the United States Department of Justice, its IP-blocking spree, account locking, DDos attacks, and the death of its primary exchanger OMNIPAY have all been a combination of factors that have made e-gold very unattractive in recent times. Exchangers now charge between 25% and 50% for converting e-gold to national currencies!
Before you disagree with me, ask yourself why do shady characters find e-gold attractive? Again, you may say e-gold is not the only e-currency that offers privacy but you must realise that none of its contenders are as global as it is.
To the latest news about a kidnapping group in Nigeria demanding a $10,000 ransom which they have requested to be paid via e-gold:
A group claiming responsibility for the kidnapping of Norum, the brother of Super Eagles player Joseph Yobo has come out to ask for a ransom of $10, 000 (about one million one hundred and ninety thousand naira).
The elder brother of the Everton of England player was kidnapped at Rumuomasi area of Port-Harcourt in the early hours of last Saturday while returning from a night club and in the electronic mail with the subject ‘Urgent Attention Needed’ sent to Nigerian Tribune on Wednesday, MATIAPH Group, the group claiming responsibility for the kidnapping of Norum, is demanding the payment of $10,000 e-gold for Norum to regain freedom.
E-gold is an electronic currency issued by e-gold Ltd. It is integrated into an account based payment system that empowers people to use gold as money and the system enables people to spend specified weights of gold to other e-gold accounts.
I checked the e-gold account mentioned in the news report by Nigerian Tribune and got the message: “Error(s) detected: The PAYEE_ACCOUNT specified is not a valid account: 5486490”. It appears e-gold has deleted the account entirely.
e-gold might still be saved from drowning if it would scrap its privacy (anonymity) feature entirely, and pursue a vigourous Know-Your-Customer (KYC) policy.
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Indeed, e-gold really helped many cyber criminals get away. Now, I really hope they return better and stronger!
I guess e-gold never anticipated the possibility of this feature being hijacked by criminals. Now that it is obvious that the same feature that was meant to help the online community is not a disadvantage, they need to make a U-turn fast.
Really, I do not mind the rigorous background check of AlertPay or PayPal, I personally feel that it is only a criminal that will be afraid of such checks. Why will anyone mind if there are no skeleton in the cupboard. 😀
Well, e-gold has already decided to do a rigorous background check on users. They must necessarily comply with US Laws if they want to operate from the USA.
[…] lot has happened since I blogged about e-gold’s privacy feature its nemesis? The height was Douglas Jackson’s blog post about e-gold’s uncertain future. Mainstream […]