[118194] in Cypherpunks
E-gold "privacy" policy
daemon@ATHENA.MIT.EDU (Secret Squirrel)
Tue Sep 21 17:37:38 1999
Date: 21 Sep 1999 21:06:56 -0000
From: Secret Squirrel <secret_squirrel@nym.alias.net>
Message-ID: <2065d7e06bbb5204cfc8a1535405ea02@anonymous>
To: cypherpunks@cyberpass.net
Reply-To: Secret Squirrel <secret_squirrel@nym.alias.net>
https://www.e-gold.com/unsecure/privacy.htm:
The Gold & Silver Reserve does not "launder" money. e-gold[tm] is not a
system for evading taxes. Tax evasion is a fool's game, certain to result
in harmful loss - financial or worse. G&SR complies with US legislation
and regulations which require virtually every monetary transaction to
have a paper trail which must be made accessible to government officials
acting in accordance with law.
Our system is secure, in the sense of preventing hackers/thieves from
diverting/stealing your gold. It is private insofar as we do not release
information about you or your account to third parties without your
explicit consent. But it would be irresponsible for us to attempt to
conceal information from the government - such actions could potentially
expose customer metal to risk of confiscation.
The privacy issue boils down to "know your customer" requirements.
G&SR does not require a customer to enter detailed identifying information
in order to create an e-metal[tm] account. We must, however, account for
flows of value in order to avoid the reality or appearance of accepting
or processing proceeds of illegal activity. We must consider three
categories:
1.from outside world into the self-contained e-metal[tm] system
2.within e-metal[tm] universe
3.from system back to outside world.
Into e-gold System
Value enters the e-gold[tm] universe in two ways: InExchange, and by
Direct Bailment of metal. G&SR keeps a copy of all incoming checks
and wire information from customers. This provides a traceable
link to their bank account and the bank certainly has all required
identifying information.
Use of an anonymous medium of payment is another matter. If a
customer (who has not previously identified herself by used a
bank-administered medium) renders payment using cash, specie,
money order or any other bearer (anonymous) medium of payment, we
require documentation of identity. If anonymous media are conveyed
in quantity of $10,000 (or equivalent) we must file an accurate
information return (Treasury form 8300). It is not permissible to
structure payment so as to evade the reporting requirement.
Within e-gold System
All transactions within e-metal[tm] system generate a permanent
record so it is possible to trace the entire lineage of any metal
back to point where value entered the system.
Withdrawals of value
Transactions which withdraw value from the e-metal[tm] system
are Redemption, and, OutExchange. Both of these entail postal
delivery. Proceeds of OutExchange are transmitted through the
banking system.
Capital Gains
e-metal[tm] spending and OutExchange both involve a decrement of
e-metal[tm] balance, and probably entail realization of a capital
gain or loss. G&SR calculates capital gain(loss) using a precise
FIFO method, and provides the information to the customer.
It is hoped this review of privacy considerations will help to dispel any
misconception that e-gold[tm] affords a mechanism for laundering money
or evading taxes. If you send us a payment which requires the filing of
an information return, but refuse to adequately document your identity,
we will not accept it. We at G&SR do not believe tax evasion would solve
anything anyway. Pay everything Caesar demands, but pay him with his
kind of money. We envision a benign future, where fiat legal tender is
the preferred medium for paying taxes, but not for much of anything else.
