E-gold indicted by federal grand jury

Indictement alleges online digital currency firm has been used widely by criminals

E-gold faces multiple charges

E-gold, the global online digital currency business, has been indicted by a federal grand jury in Washington DC.

The company and its owners have been accused of running an unregulated financial network that caters to criminals moving money.

Founded in the 1990s, E-gold allows users to move monetary funds across the internet by transferring ownership of gold.

The indictment alleges that E-Gold has been a highly favoured method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography.

It also alleges that the defendants conducted funds transfers on behalf their customers, knowing that the funds involved were the proceeds of unlawful activity; namely child exploitation, credit card fraud, and wire (investment) fraud; and thereby violated federal money laundering statutes.

The US Secret Service is investigating E-gold and its owners Mr Douglas Jackson, Reid Jackson and Barry Downey, with the assistance of the Internal Revenue Service and FBI. The money laundering conspiracy charge carries a maximum 20 year prison sentence.

Last December, the Department of Justice raided the Melbourne, Florida, office of Gold and Silver Reserve, which operates E-gold, and seized more than 100 boxes of paper records in a move dubbed Operation Goldwire.

In a recent statement Jackson said he was blocking about 2,000 accounts from his system a month, and that he had voluntarily turned over detailed account and transaction histories to federal law enforcement in the US.

Michael Barrett, chief information security officer at PayPal, said: 'Making it harder for criminals to move their money around is important. We're currently improving our fraud models so we can more accurately detect whether we are dealing with a criminal or a real person.'