Their biggest issue (besides being a centralized service thus easy targeting) was not encrypting internal communications and allowing comments to accompany transfers which were typically "For 200 dumps of CCs" or something similarly illegal. They tried to avoid KYC regulations by just providing the internal ledger, you had to go through 3rd party exchangers in order to buy in or cash out of the system and these parties were supposed to do KYC.

Pecunix and C-gold are other centralized, closed book-entry systems still around though Pecunix changing to a voucher system.