Monday, January 02, 2006

E-Gold's Offices Raided by FBI

According to a new article by BusinessWeek (subscription required, bugmenot might have logins), the online payment processor, e-Gold's offices have been raided by the FBI.

Law enforcement officials worry that the little-known digital currency industry is becoming the money laundering machine of choice for cybercriminals. On the evening of Dec. 19, agents with the Federal Bureau of Investigation and Secret Service raided the Melbourne (Fla.) office of e-gold's parent company, Gold & Silver Reserve Inc., and the nearby home of its founder, Douglas L. Jackson. Agents copied documents and computer files, but so far no charges have been brought. The Secret Service and the FBI declined to comment on the raid. Jackson has denied any wrongdoing, though the raid isn't the first indication that federal investigators view e-gold as a magnet for online misdeeds. The FBI separately is pursuing about a dozen probes in which e-gold appears as a "common denominator," a senior agent says.
e-Gold is well known as a somewhat seedy payment processor, that supposedly backs its payments in gold. According the article, it is very easy to create an account with phony info and fund it through a variety of exchange services.

One of the many problems with e-Gold is the fact that you cannot reverse transactions. Once you send money, you cannot change your mind, and has lead to a lot of hackers trying to break into accounts to steal funds, including the creation of an e-Gold trojan horse that stole peoples money automatically.

Although e-Gold is one of the few payment processors like this, there is a rumor that another similar payment processor known as IntGold has also been raided by the FBI. If you have an account there, I would suggest getting your money out.

You can read the full story at the TalkGold forums.

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