The indictment of e-gold for, among other things, the operation of an unlicensed money transmitting business, raises the question of whether or not U.S. residents operating as DXMerchants are violating the law if they do not register, if required, with their respective states and if they do not register with the Federal gov't.
As background, one ought to read the hearing transcript of December 29, 2005 (thanks to Doro for the link) and the indictment filed on April 24 this year (thanks to LRM for the link).
http://www.e-gold.com/docs/Transcripts122905.pdf
http://www.usdoj.gov/criminal/pr/pre...old_indict.pdf
E-gold has been indicted for violating
18 U.S.C. § 1960. Back in the December '05 hearing lawyers for e-gold and the gov't argued over whether or not e-gold was transmitting money and therefore required to be licensed. The gov't argued that the following clause of 18 U.S.C. § 1960 applied: "the term 'money transmitting' includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; . . ."
E-gold argued against the gov't's interpretation of the law and claimed that
this law was the applicable one and that e-gold did not meet the criteria for a money transmitting business.
Sixteen months later the gov't is pressing ahead with it's claim that e-gold is violating 18 U.S.C. § 1960. The Dept. of Justice, at least, is not persuaded by e-gold's interpretation of the matter.
What might this mean for DXMerchants in the U.S.? Well, if money transmitting that is subject to licensing "includes transferring funds on behalf of the public by any and all means" and the gov't deems this applies to digital currencies, it would seem DXMerchants need to comply with all applicable laws regulating the money transmitting business. 18 U.S.C. § 1960 states in part that a defendant is liable "whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable."
Seems to me, if I were a DXMerchant I would want to
know what if any regulations applied to my business. Clearly the law does not allow one to fall back on ignorance of the law or having accepted the advice of an online e-currency exchange guru.
Think of how this looks to the Feds . . . You are the beneficial owner of an IBC incorporated in the notorious scam haven of Vanuatu and you are in the business of transmitting money and have failed to become properly licensed . . .
Are U.S. DXMerchants breaking the law?
Hybrid Mode
