Definition Edit

E-Gold is a digital currency which is backed by gold stored in Europe or the Middle East. E-Gold can be used as a trusted third party intermediary, whereby the money is transferred only once the product or service bought has been received.

Users opening an e-gold account are actually buying a quantity of gold. The value of the account is linked to the price of gold. The system, which also allows the transfer of money to other users, operates with some companies acting as market makers, buying and selling this virtual currency (i.e. the underlying metal) against other currencies. The US authorities have accused this scheme of violating anti-money laundering regulations. In 2008 the company's founder and two senior directors agreed to plead guilty to various charges related to money laundering and the operation of an unlicensed money transfer business. In 2009 the company contacted the US Government in order to reconvert its activity. The dialogue culminated in the development of a Value Access Plan acceptable to both the company and the Government. Once this plan is implemented, the expectation is that users will again have access to the value in their accounts.[1]

References Edit

  1. Virtual Currency Schemes, at 13 n.2.

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