Trading had been suspended on NETeller shares yesterday following the arrest on Monday of the two Canadian founders and former directors of NETeller, but until this morning the reasons for their arrest remained unclear.

Today the FBI issued a joint statement which stated that Stephen Lawrence and John Lefebvre were arrested as “part of the US Department of Justice’s effort to combat unlawful internet gambling through implementation of the anti-money laundering statutes”.

The press release settled debate as to whether the arrests were a result of the UIGEA, explaining that the men would not be charged under the new anti-gambling law, but under the under the old 1956 money laundering act instead. Their activities are seen to have violated the 1963 Wire Act.

Canadians Stephen Lawrence and John Lefebvre founded NETeller in 1999 and set the company up on the Isle of Man, remaining as the company’s non-executive directors after NETeller became a Plc in 2004. But in December 2005 Lefebvre stepped down from his position as non-executive director, and Lawrence followed Lefebvre out of the company in October 2006. Although the two men maintained a heavy share interest in the company they were otherwise unconnected.

For this reason their arrest on Monday has shocked the online gambling industry, indicating that the US authorities will not just target those whose activities have become illegal since the passage of the UIGEA, but will also go after those seen to have broken older gambling related laws in the past.

As yet no charges have yet been brought against NETeller itself but it seems highly likely they will be targeted in the near future, and there is a very real prospect of them pulling out of the US market.

In the meantime American gamblers should start to consider the fact that their options for funding online gaming activities are rapidly drying up.