[fc-discuss] Financial Cryptography Update: On Digital Cash-like Payment Systems

[cyphrpunk]

On 10/24/05, Steve Schear <s.schear at comcast.net> wrote:
> I don't think E-gold ever held out its system as non-reversible with proper
> court order.  All reverses I am aware happened either due to some technical
> problem with their system or an order from a court of competence in the
> matter at hand.

Back in the days of such companies as emutualfun.com and
stockgeneration.com there were cases where e-gold froze accounts
without waiting for court orders. I was involved with the discussion
on the e-gold mailing lists back then and it caused considerable hard
feeling among the users. E-gold was struggling to deal with the
onslaught of criminal activity (Ian Grigg described the prevailing
mood as one of 'angst') and they were thrown into a reactive mode.
Eventually I think they got their house in order and established
policies that were more reasonable.

> Its not clear at all that courts will find engineering a system for
> irreversibility is illegal or contributory if there was good justification
> for legal business purposes, which of course there are.

Yes, but unfortunately it is not clear at all that courts would find
the opposite, either. If a lawsuit names the currency issuer as a
defendant, which it almost certainly would, a judge might order the
issuer's finances frozen or impose other measures which would impair
its business survival while trying to sort out who is at fault. It
would take someone with real cojones to go forward with a business
venture of this type in such uncharted waters.

CP