Date: Fri, 6 Jan 2006 22:15:41 -0500
To: "Philodox Clips List"
From: "R. A. Hettinga"
Subject: [e-gold-list] Dr. Jackson - Business Week Article Response
Date: Fri, 06 Jan 2006 21:39:52 -0500
Subject: [e-gold-list] Dr. Jackson - Business Week Article Response
To: "e-gold Discussion"
From: "Bill Cunningham"
In on-going conversation with Dr. Jackson, he replied to a recent Business
Week article with the following letter.
He has agreed to allow me to share it on this forum as well as other
information outlets.
_________________________________________________________________
Letter from Dr. Douglas Jackson; Chairman, e-gold, Ltd.
e-goldF has recently been the subject of a slanderous and unfounded
article in Business Week. e-gold strongly refutes the allegations and
presumptions of this article. The article chose to focus through anecdote
and suspicion only on an exception - criminal abuse - and ignores the
overwhelming majority of e-gold usage. It also fails to note that all
online payment mechanisms including credit cards and intermediaries such
as PayPal are targeted by criminals,likely at a much greater magnitude
than e-gold, and fails to relate the very proactive steps e-gold takes to
eliminate any criminal behavior involving e-gold.
e-gold and its Operator, Gold & Silver Reserve (G&SRF), including G&SR's
exchange service OmniPayF in cooperation with the United States Government
and pursuant to a lawfully issued written request, did allow an
examination of the e-gold and OmniPay computer systems and data. The
examination occurred on December 16th after normal business hours so as to
avoid disrupting access to the system. The examination utilized the full
resources of e-gold's system and prevented customer access. We were told
by the government examiners that the outage would be for a few hours,
however, due to the volume of data maintained by e-gold for its customers'
protection, a surprise to the examiners, the examination occupied e-gold's
computing capacity for 36 hours. e-gold apologizes for any inconvenience
of the system down time caused by the government's request. No charges
have been filed against e-gold, G&SR, OmniPay or any of its principals.
e-gold operates legally and does not condone persons attempting to use
e-gold for criminal activity. e-gold has a long history of cooperation
with law enforcement agencies in the US and worldwide, providing data and
investigative assistance in response to lawful requests.
I'm proud of what we have accomplished so far with e-gold. e-gold, now in
its 10th year online, is growing exponentially because of a network
effect, a global cascade of Users telling their friends who then tell
their friends. For the first time since our launch in 1996, this growth is
providing the revenue and resources needed for e-gold to accelerate
technical development and other refinements to make it more reliable and
even less hospitable to those who would seek to abuse it.
We are processing the same volume of transactions and growing at the same
exponential pace that PayPal was in the second quarter of 2000. One
difference, though, is that they had to give away $tens of millions of
their investors' money to build a critical mass of user balances and were
continuing a burn rate of about $10 million per month during this period.
Altogether they burned through about $275 million of capital losses before
their IPO.
e-gold, in contrast, lacking significant outside investment:
o has attained a circulation larger than Canada's official gold reserves
currently 3.46 metric tonnes of gold, equivalent to about $55 million at
current exchange rates).
o has web traffic surpassing etrade.com and citi.com and is neck and neck
with kitco.com as the most heavily trafficked gold related site on the Web
o settles 50 to 60 thousand user-to-user payments per day, a daily value
of about $10 million
o has active Users in every country, (including more than 150,000in
China)despite our lack so far of foreign language versions - a high
priority on our to-do list e-gold is the only payment mechanism that is
truly global, enabling any merchant to accept payment online even if the
payer lives in a third world country,has no credit card, or is perhaps
'unbanked' altogether.
e-gold enables the migrant worker of modest means to send value back to
his family in Mexico or Bangladesh at a fraction of the cost of
conventional international remittance mechanisms. e-gold alone is free of
chargeback risk, yet the fee for receiving payment in e-gold is a tiny
fraction of those charged by any other systems.
Thanks to e-gold, for the first time in history, normal people of modest
means worldwide have the option of using currency that is designed from
the ground up to be immune to debasement, with a governance model that
precludes even its management and founders from having the power to
subvert it.
Gold & Silver Reserve has been operating for over nine years. Seeking to
comply with every applicable law, G&SR has reached out to the Government
dozens of times, has repeatedly met with officials from the Internal
Revenue Service, the FBI, SEC and a variety of other Federal agencies, and
has been told q in no uncertain terms q that we were operating legally and
in full compliance with all laws, rules and regulations. Additionally, the
Government has requested from us q on more than three hundred occasions q
information regarding individuals it believed to be lawbreakers. Gold &
Silver Reserve complied with every single request in a professional and
timely fashion. Numerous Government officials have gone so far as to
commend us in writing for our efforts in complying with their requests and
aiding them in their investigations.
Very recently, however, the Government concluded that it was unable to
lregulaten our business under any current statutes or regulations. Rather
than moving Congress to enact legislation, the Government apparently chose
to undertake to regulate us under pre-existing statutes which are totally
and utterly inapplicable to our business. To do so, the case the
Government brought against Gold & Silver Reserve centered around false
statements and fabrications made to a Magistrate Judge in Washington, D.C.
A week later, when challenged by that Judge, the Government, fearing it
would lose its case filed a second suit against Gold & Silver Reserve. We
are now addressing that action and are confident that we will be
victorious in a very short time.
Both OmniPay and e-gold have been substantially harmed. Both sites were
off-line altogether for 36 hours - an interval during which we were at a
loss to know what to announce or even how to announce it. There were other
direct interventions as well that I am not yet at liberty to discuss that
nearly crippled OmniPay's ability to honor its obligations to and on
behalf of users. The worst effect of course is on our reputation. This
irresponsible smear piece will surely impair our efforts to build
strategic relationships with the host of businesses and individuals that
would benefit from an embrace of e-gold.
Let me be very clear. e-gold in no manner condones persons or
organizations attempting to use e-gold to support criminal acts. The exact
opposite is true. e-gold limits accounts that are suspect of illicit
activity and has a long history of cooperation with law enforcement
agencies.
There are two elements that make e-gold about the dumbest choice a
criminal could make if seeking to obfuscate a money trail or otherwise
hide the proceeds of crime.
1. it is impossible for a general user of e-gold to send/add money(value
in any form) into the system... he can only get e-gold by receiving an
e-gold Spend from someone who already has some.
2. there's a permanent record of all transfers, that is, a permanent
record of the entire lineage of every particle of value in the e-gold
system.
There is nothing "anonymous and untraceable" about e-gold. e-gold Spends
settle by book entry - it isn't so-called "digital cash".
e-gold is not about crime. e-gold is not a hospitable environment for
criminals. e-gold maintains an efficient and highly capable investigative
staff to aid in the identification, apprehension and prosecution of any
criminal abusing the system. Our staff has participated in hundreds of
investigations supporting the FBI, FTC, IRS, DEA, SEC, USPS, and others.
This is the reality of every payment system, the need to aid in rooting
out criminal abuse, whether it is child pornographers taking advantage of
the multiple layers and indirection of credit card middlemen, or smurfs
aggregating cash via international remittance processors or even state
lotteries.
e-gold has taken a proactive approach, reaching out to law enforcement
agencies and NGO's (Non-Governmental Organization) to foster closer
cooperation in combating crime online. For example, e-gold is a charter
member of the Financial Coalition to eradicate Child Pornography,
organized by the National Center for Missing and Exploited Children, along
with Visa, MasterCard, Microsoft, AOL, PayPal, First Data and some of the
major banks.
I hope to have additional and useful facts shortly and will communicate
them when appropriate. I can assure you e-gold is up and running,
supporting its customers, and continuing to grow.
Dr. Douglas Jackson
_____________________________________________________________________
Bill Cunningham
Business Advisers
bcunningham@baiadviser.com
321-773-4385
www.businessadvisersinc.com
"Dedicated to Making Your Success a Reality"
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--
-----------------
R. A. Hettinga
The Internet Bearer Underwriting Corporation http://www.ibuc.com/
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
--
-----------------
R. A. Hettinga
The Internet Bearer Underwriting Corporation http://www.ibuc.com/
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
