The U.S. Mint acted after federal prosecutors around the country began forwarding inquiries about the coins. "We don't take these consumer alerts lightly," said spokeswoman Becky Bailey. "Merchants and banks are confronted by confused customers demanding they accept Liberty Dollars. These are not legal coin."

Norfed [the organization behind liberty dollars] responded to the Mint on its Web site. "Here it is in plain sight . . . the Liberty Dollar is not a coin, not legal tender, and backed with inflation proof gold and silver!"

Norfed encouraged people to keep doing "the drop," referring to its advice to drop the coin into merchants' hands so they can feel its weight.

That could land the dropper in prison, Bailey warns, for up to five years.