A History of Digital Currency in the United States: New Technology in an Unregulated Market (Palgrave Advances in the Economics of Innovation and Technology)

This book presents detailed case studies of the first commercial internet digital currency systems developed between 1996 and 2004. Transactions completed with the new technology circumvented all US financial regulations, an opening that transnational criminals exploited. Mullan explains how an entire industry of companies, agents, and participants turned a blind eye to crimes being committed in this unsupervised environment. He then tracks the subsequent changes made to US regulations that now prevent such unlicensed activity, illustrating the importance of supervising products and industries that arise from new disruptive technology. This book distills hundreds of hours of interviews with the creators and operators of early digital currency businesses to create detailed case studies of their practices. Contents 6 List of Charts 8 Chapter 1: Introduction 9 Who Uses Digital Currency and Why? 12 What Is Digital Currency? 14 New US Financial Regulations 15 Legal Cases 15 Building a Better Mousetrap 18 A Lack of Early Digital Currency Regulation 19 Notes 26 Chapter 2: E-gold 27 Why e-gold? 33 One Hundred Percent Reserves at All Times 35 Grams, Troy Ounces, and Kilos 36 Financial Risk 41 E-gold Versus Bank Payments 41 The Ponzi Tsunami 46 Ponzi Payments 50 The Elephant in the Room 52 Iranian Accounts 55 E-gold Asset Seizures 61 18 U.S.C. §§ 1961–1968 (RICO) 62 § 981—Civil Forfeiture 63 OmniPay 78 The Judge’s Opinion 80 Guilty Plea and Consent Order of Forfeiture 82 Notes 88 Chapter 3: The Liberty Dollar and Bernard von NotHaus 95 NORFED 98 American Liberty Currency Circa 2000 99 Bernard von NotHaus 101 Recognized Issues 102 Issue 1 102 Issue 2 102 Issue 3 103 100 Percent Gold and Silver 103 Digital Liberty Dollars 104 eLibertyDollar Consumer Transactions 107 Federal Bureau of Investigation Raid and Seizure 110 The Liberty Dollar Case 114 2015 Sentencing 115 Notes 116 Chapter 4: E-Bullion and Mr. James Fayed 118 E-Bullion Advantages 122 James Michael Fayed 122 E-Bullion History 123 Competition 127 Innovation 129 E-Bullion’s Competition 130 Computer Operation, Servers, and Security 131 Exchange Agents 135 Background 137 Why Accept E-Bullion? 140 Fraud Prevention 141 HYIP Ponzi Scams and E-Bullion 141 AdSurfDaily ($110 Million) 143 Legisi ($72 Million) 143 FEDI HYIP Ponzi Scheme (2003) Multimillion 144 Gold Quest International ($28 Million) 144 Pathway to Prosperity ($70 Million) 145 Profitable Sunrise (Estimated in the Tens of Millions of Dollars) 145 Liquidity in the E-Bullion Marketplace 145 Murder of Pamela Fayed 154 Remission 155 Notes 157 Chapter 5: Crowne Gold 160 Terry Neal 161 Crowne Gold 167 $7 Million Hack 168 Finanzas Forex/Evolution Marketing Group (EMG) 169 Affidavit of Brian DiPerna 171 Forfeiture 175 Notes 176 Chapter 6: Liberty Reserve 178 Background on Liberty Reserve 181 2006 Goldage Indictment 185 The Liberty Reserve S.A. Indictment and Case 191 Notes 200 Chapter 7: IntGold 204 Notes 211 Chapter 8: OSGold 212 StormPay Example 213 A Time of Acceptance 214 Off-Shore Gold and OSOpps 216 Exchange Service 217 The Shills 221 The Scam 225 The Foreign Banks 227 Debit Cards 227 The Complaints 228 Notes 233 Chapter 9: GoldMoney 236 Building a Better Mousetrap? 237 Created by Bankers 239 Cambios 244 Why All the Patents? 245 Belief Versus Reality 248 Notes 250 Chapter 10: WebMoney Transfer 251 WMID 253 WebMoney Passports 253 Formal Passport 256 Personal Passport 256 Bitcoin 257 WebMoney Transfer 258 Keeper Standard (Mini) 264 Keeper Mobile 264 Keeper WebPro (Light) 264 Notes 266 Chapter 11: New FinCEN Rules 267 Prepaid Access 271 The MSB Rule 272 Definition of MSB 276 Foreign-Located MSBs 276 Activity Threshold 276 Penalties 277 Money Transmitter 277 Suspicious Activity Reporting 277 Notes 277 Index 279 This Book Presents...case Studies Of The First Commercial Internet Digital Currency Systems Developed Between 1996 And 2004. Transactions Completed With The New Technology Circumvented All Us Financial Regulations, An Opening That Transnational Criminals Exploited. [the Author] Explains How An Entire Industry Of Companies, Agents, And Participants Turned A Blind Eye To Crimes Being Committed In This Unsupervised Environment. [the Author] Then Tracks The Subsequent Changes Made To Us Regulations That Now Prevent Such Unlicensed Activity, Illustrating The Importance Of Supervising Products And Industries That Arise From New Disruptive Technology. This Book Distills Hundreds Of Hours Of Interviews With The Creators And Operators Of Early Digital Currency Businesses To Create Detailed Case Studies Of Their Practices.-- E-gold -- The Liberty Dollar And Bernard Von Nothaus -- E-bullion And Mr. James Fayes -- Crowne Gold -- Liberty Reserve -- Osgold -- Goldmoney -- Webmoney Transfer -- New Fincen Rules. P. Carl Mullan. Includes Bibliographical References And Index. "This book presents ... case studies of the first commercial internet digital currency systems developed between 1996 and 2004. Transactions completed with the new technology circumvented all US financial regulations, an opening that transnational criminals exploited. [The author] explains how an entire industry of companies, agents, and participants turned a blind eye to crimes being committed in this unsupervised environment. [The author] then tracks the subsequent changes made to US regulations that now prevent such unlicensed activity, illustrating the importance of supervising products and industries that arise from new disruptive technology. This book distills hundreds of hours of interviews with the creators and operators of early digital currency businesses to create detailed case studies of their practices."-- Back cover Front Matter....Pages i-vii Introduction....Pages 1-18 E-gold....Pages 19-86 The Liberty Dollar and Bernard von NotHaus....Pages 87-109 E-Bullion and Mr. James Fayed....Pages 111-152 Crowne Gold....Pages 153-170 Liberty Reserve....Pages 171-196 IntGold....Pages 197-204 OSGold....Pages 205-228 GoldMoney....Pages 229-243 WebMoney Transfer....Pages 245-260 New FinCEN Rules....Pages 261-272 Back Matter....Pages 273-278