Dr. Douglas Jackson brings a unique perspective to alternative digital currencies and the provision of exchange services for such media, having created/launched both industries in 1996 and 2000 respectively. Dr. Jackson was the founder of e-gold®, an electronic medium of exchange that mobilized the value of gold for Internet payments. By 1999, the year Paypal was launched, the Financial Times described e-gold as "the only electronic currency that has achieved critical mass on the web...".
In 2000, Dr. Jackson refined the concepts of privately issued money, building from the imperatives of freedom from default risk and finality of settlement. e-gold implemented a primary dealer model and other governance elements derived from best practices of government monetary authorities. A global market of independent providers offering exchange services on a competitive basis was fostered, igniting exponential growth in e-gold usage. Originally bootstrapped with total capital investment under $4 million, by late 2000 e-gold was settling a larger volume and value of payments every month than Digicash, Beenz, Flooz and Cybercash's Cybercoin processed combined and cumulatively, despite their combined equity investment exceeding $300 million.
At its peak in 2006, e-gold was backed by gold reserves exceeding 3.6 metric tonnes - more than the official gold reserves backing the Canadian Dollar. The system was routinely processing over 75,000 Spends per day settling an annualized payment volume of nearly $3 billion, USD-equivalent.
It is said that a pioneer can be recognized by the arrows sticking out of his back. Though a founding member of the NCMEC Financial Coalition Against Child Pornography, and despite providing vital assistance to law enforcement agencies around the world in hundreds of investigations from 1999 through 2008, e-gold was singled out by the USSS for criminal indictment in 2007 as an unlicensed money transmitting business. In order to demonize the company and isolate it from public support, government press releases falsely portrayed it as turning a blind eye to criminal activity perpetrated by e-gold users.
The government action against e-gold was a case of first impression. As noted by the prosecutor,
“Digital currencies are on the forefront of international fund transfers. e-gold is the most prominent digital currency out there. It has the attention of the entire digital currency world. That world is a bit of a wild west right now. People are looking for what are the rules and what are the consequences.”
The case was resolved by a Plea Agreement that laid out a blueprint for such rules, detailing a novel template for a compliance model consisting of a bespoke hybrid of requirements blending relevant elements of existing regimes for Money Services Businesses and Depository Institutions.
Commenting on her substantial deviation from Federal Sentencing Guidelines (in the direction of leniency) the presiding judge, having already noted “no doubt that Dr. Jackson has respect for law” and that “the intent was not there to engage in illegal conduct”, stated in her sentencing memorandum for Dr. Jackson:
“there is no reason to shut down e-gold and G&SR, and every reason to have them come into legal compliance”
An apparently unanticipated side effect of the guilty plea, however, despite explicit statements by DOJ prosecutors denying intent to shut down the business, was that it effectively disqualified the companies for the licenses required by state laws.
Due to inability to obtain required licenses, e-gold suspended services in 2009. e-gold customers received compensation for their e-gold holdings via a Value Access Plan (VAP) completed 2014. VAP claimants received from two to five times the value that had been held in their accounts on a USD cost basis.
Beginning in 2010, Dr. Jackson and his team at Fulcrum IP Corporation have developed a next generation system that merges the monetary and transactional logic of e-gold with unprecedentedly sophisticated AML and other compliance elements. Informed by nearly two decades continuous immersion as industry pioneer, refined by insightful analysis of developments in central banking and advances involving central counterparty services, the system that has been developed affords significant low risk, fee-based revenue opportunities for financial institutions that matriculate to the system.
