E-gold could be down, Is it truth?

Online payment system E-Gold and its parent company have emerged as a preferred service for fraudsters and child pornography vendors, violating a handful of federal and local laws in the process, a new grand jury indictment alleges.

he 28-page indictment, handed down on April 24 and unsealed Friday, is the culmination of a two-and-a-half year investigation by federal authorities into the practices of one of the earliest issuers of so-called digital currency and its operating company, Gold & Silver Reserve, the U.S. Department of Justice said in a statement.

The site has grown into a "highly favored" method of payment for operators of investment scams, criminals on virtual bulletin boards who swap stolen credit card numbers and other sensitive information, and online vendors of child pornography, according to the indictment. The indictment accuses Douglas Jackson, Barry Downey and Reid Jackson at various times between 1999 and December 2005 of allowing such transactions without imposing meaningful restrictions or conducting checks on an account holder's identity, even when they were allegedly aware criminal activity was occurring.

"Criminals of every stripe gravitated to E-Gold as a place to move their money with impunity," Jeffrey Taylor, U.S. attorney for the District of Columbia, said in a statement. "As alleged in the indictment, the defendants in this case knowingly allowed them to do so and profited from their crimes."

E-Gold, which launched in November 1996 and is operated out of Melbourne, Fla., bills itself as a "superior" digital currency system backed by physical gold that can be used for e-commerce, bill payments, person-to-person payments, and other typical transactions. Douglas Jackson, its chairman, told a congressional committee last fall that E-Gold had the second largest reach of any online payment system behind eBay subsidiary PayPal, with more than 3 million accounts in 165 countries and more than $2 billion in transactions annually.

read more at http://news.zdnet.com/2100-9595_22-6180302.html