Anshe Declares War on Ginko: “It”s a Ponzi Scheme!” (Lindens block discussion. Transparency is first casualty.)

by Alphaville Herald on 20/11/05 at 6:15 pm

SL Power Player and Business Girl, Anshe Chung

By Dow Jonas

A fierce debate about trust in financial institutions is rocking the business community of SL, pitting SL’s largest land baron, Anshe Chung, said to own SL properties valued at U.S. $200,000,against Nicholas Portocarrero, SL’s largest savings and investment bank owner, reportedly holding more than US $60,000 in resident savings accounts.

In a series of forum posts, Chung has accused Portocarrero of running a Ponzi-style operation promising high yields for depositors but using up new investments to pay existing depositors, a scheme likely to lead to collapse. Such scams are named for Carlo Ponzi, an Italian immigrant to the U.S. in the early 20th century who bilked thousands of people of what was then U.S. $15 million in a double-your-money stamp investment plan. Ultimately, authorities and irate customers caught up with him, he was unable to refund deposits and served time in jail for fraud — only to emerge later to perpetrate a swamp-land scam.

Portocarrero has blandly denied the charges, and despite recent accusations, has added a feature of LL $100 free for new accounts, while reducing the interest to 0.15 percent interest per day. He says that in the country he lives in (which Anshe has claimed to be in South America, in violation of SL rules against first-life disclosure), he is unable to get a bank account due to excessive regulation and cronyism.

Chung is currently accusing Portocarrero of taking $LL 16 million, currently valued at at about US $63,000 on the LindEx, out of Second Life platform to points unknown, leaving $2 million to cover any withdrawals.

Anshe Chung is a German citizen of Chinese heritage whose real-life name and Paypal account address are known to her customers. In addition to her land sales and island rentals business, she operates a currency exchange business that has absorbed some of the customers from the failure of GOM in the summer. She also owns a percentage of, a popular third-party catalogue site for purchasing avatar accessories.

No RL name or location is known for Nicholas Portocarrero but by an in-world presence of a year, and consistent payouts on deposits has earned him numerous customers. While his claim to have received $LL 16 million in deposits is unverifiable, several weeks ago, Cyberland Equities, the only company listed on SL’s Metaverse Stock Exchange, reportedly withdrew $LL 3 million in deposits after forums disputes about reputation and financial practices flung on both sides. Cyberland’s directors acknowledge that the high return on their Ginko deposit helped cushion the impact of GOM’s failure on their land business.

Who’s Winning Losing?” is the title of a typically clever but biased and poorly-spelled forums poll accessed by less than five percent of the SL population — but an avid and influential percent. Bommerang aptly sums up the community’s concerns with poll options for losers like “Anshe Chung, due to self induced image damage for good of the community,”; “ blaze Spinnaker, due to beleiving in a sinking ship; and “Second Life as a whole, for a ‘trust and succeed’ ideal seemingly disappearing down a drain.”

In a record-setting day with five threads locked by forums moderator Jeska Linden, SL residents refuse to stop debating the pros and cons of Chung versus Ginko, as many felt driven to support one of the other in SL’s nervous economy.

Meanwhile traffic to Ginko terminals for both deposits and withdrawals appeared normal, and Ansheland continues to sell like hot-cakes especially in the newest sims in the north and on her private islands.

In closing the offending posts, Jeska Linden has invoked an oft-cited TOS rule about not starting threads devoted to one person and engaging in personal attacks.

But residents object that when businesses involving millions of dollars are being traded, the public has a right to demand more transparency.

Currently, Anshe has thrown down a challenge that many forum-watchers have seen as a threat by offering to bail out all existing Ginko depositors while urging Portocarrero to close Ginko, apologize, and explain where the money is — in the interests of the good of Second Life as a whole. Detractors have rushed to accuse her of a blatant bid to undermine another business and take it over.

Insiders say Anshe has said she has no plans to start a bank, although she is willing to temporarily provide some interest on former Ginko accounts. Analysts have pointed out, however, that Apotheus Silverman, owner of where Anshe has part interest, has contemplated in the past adding a banking feature to his new currency exchange. His site already has numerous deposits from shoppers which currently sit in accounts without interest, as many people find it inconvenient to go back inworld from work during their lunchtime shopping sprees to withdraw the few hundred or thousand they have remaining after their catalogue purchases. The notion seems quite plausible that these small depositors, coupled with the larger amounts from content-sellers often calculated in thousands of U.S. dollars, could be lured to add more to with interest-bearing accounts. Seen in that light, Anshe’s offer of a bail-out seem to some not only to be an altruistic image move, but a shrewd business move.

The acrimonious forum fights have prompted numerous parodies of Anshe’s original post alleging foul play, leading to the sort of racist and sexist baiting the land baroness has weathered before when references to are made to her early SL days of “private entertainment for lonely men”.

Chung questions whether it is right for Ginko to remove so much LL cash from the game and cites her own investments ploughed back into world infrastructure; critics point out that any cashout through LindEx or, both of which have caps on withdrawals, or IGE, are merely providing Lindens for players who want to buy content therefore helping the economy in another way to be more liquid. One practice reduces inflation; the other increases, say some commentators.

Any sudden cashout, such as began to happen with GOM last summer, however, destabilizes the fragile toy-like economy of SL, with it’s US $40,000-60,000 US per day handled by no more than 4,000 people logged on at any one time.

Many finance-watchers have been disturbed to find the Lindens taking a neutral position on the financial scandals. In a November 17 announcement, Linden Lab’s attorney Ginsu Linden said, “We applaud the continued innovation and entrepreneurship of our community….please keep in mind that Linden Lab does not own, operate or insure these [financial] services.”

Travis Lambert, one of SL’s most trusted figures for his work at the newbie Shelter, announced he had withdrawn his account of 75 percent of the Shelter’s donated funds from Ginko, while keeping in 10 percent.

22 Responses to “Anshe Declares War on Ginko: “It”s a Ponzi Scheme!” (Lindens block discussion. Transparency is first casualty.)”

  1. Harlequin Salome

    Nov 20th, 2005

    “We applaud the continued innovation and entrepreneurship of our community….please keep in mind that Linden Lab does not own, operate or insure these [financial] services.”

    *snicker* Until we decide it works really well, and then we push everyone else out.

    But LL would never *ever* do anything like that, right? *nods slowly* We love Big Linden.

  2. stubblehead

    Nov 21st, 2005

    We love Big Linden.

    Utter foolishness, this comparison. But I’ve come to expect it from the gripe-happy readership of the herald.

  3. Marsellus Wallace

    Nov 21st, 2005

    Since the Lindens are worth real money and people are in different countries, wouldn’t this be considered intercontinental wire fraud if true? I mean can someone get into trouble in real life for committing fraud in these games? Scams, Schemes, Cons, etc.

    I would like to know why Anshe is making these accusations. I mean what proof or supposed proof is there? Maybe I over looked it or maybe this is just a sad attempt to rub out the competion via bad press.

    Marsellus Wallace
    Just curious.

    P.S. P, I recognize the writing style, why use a pen name though for this article?

  4. Guni Greenstein

    Nov 21st, 2005

    Actually Anshe challenged Ginko to disclose information about profitability of possible investments and the whereabouts of the 18 million L$ in deposits they collected. She posted that she thinks a Ponzi scheme is the most likely explanation for how Ginko is run as long as the owner of Ginko doesn’t provide any more specific information. That is not the same as her saying she knew it is a Ponzi.

  5. Cocoanut

    Nov 21st, 2005

    If it’s Prok who wrote this article, I’m gonna be pissed all over again.


  6. Harlequin Salome

    Nov 21st, 2005

    Marsellus, that depends on how wire fraud works, which I’m really personally unsure of. But I think Lindens are *worth* money but are not considered a currency in and of themselves. Under the law, I think, buying lindens is considered a purchase of an item rather than a currency exchange.

    Whether or not that is considered wire fraud is beyond me, though. But it is an interesting consideration, when you note that Korea, I think it was, allowed someone to sue a game company to return to him an item he lost in game or something similar. Its a scary consideration… could a virtual world be considered its own country?

  7. Urizenus

    Nov 21st, 2005

    You’re thinking of the China case, Harlequin.

    If there was a scam bank in SL (and we did have one on TSO) legal action would be most interesting. Lindens might claim that they are off the hook because of all the CYA stuff in their Terms of Service agreement but its not clear how that will fly in the face of all the hype they generate about making money in the game. It is certainly a different situation than EVE Online where scaming and ripping off people is part of the stated gameplay. Even if courts wouldn’t step in now, legislative oversight doesn’t seem too far in the distance. There probably needs to be more money in the game before this happens — I’m guessing this will all fly under the radar of legislative and judicial oversite until the amounts get to be nice big round numbers — say half a million or a million — or until a group of depositors from one state take a big whack and a state attorney general gets interested.

    p.s. Dow Jonas, like Pat the Rat, should not be thought of as belonging to a single typist. If you see Dow Jonas in game be sure to say hi.

  8. Marsellus Wallace

    Nov 21st, 2005

    My former roommate was a US Marshall and used to warn me about this stuff. It does not have to constitute currency to be fraud. You can defraud someone out of a home, car, (lol for those who read the news, you’ll get that comment lol), whatever. If it is worth real money and it is obtained through deceitful practices that could be construed as fraud. Granted you would have to take a shitload of virtual currency from someone for any action to be taken and even so how would you prosecute someone for a virtual crime that an avatar does?

    I think a better question is, if the game makers state something holds value, can their ToS protect a gamer from prosecution? I mean if the term Buyer Beware is in ToS, etc, then if you scam someone does the ToS shield you from the law? However, if you clearly violate ToS, are you violating just that or the law as well if your violation allowed you to profit from it with Lindens?

    I think the Herald should interview an FBI agent. I would do it myself (FBI office here locally), but just in case some of my past activities fall into the category that they do violate the law, I don’t want to hand myself over to them or shed light on activities which could get other gamers into trouble. lol Frankly, I think jail time for playing a game would be a hard thing for America to swallow, but a lot of people now run their outside companies from these games. Where do you draw that legal line?

    Casinos for example. The server is ran out of California, even online casinos cannot be based here if I am not mistaken without some form of gaming license. Players are converting their casino money to real money. Hell this was one of the first things reported about my group. Is that operating a casino without a license?

    It all gets blurred and grey here.

    I remember reading about the Chinese thing. However, the game makers were found responsible to pay back the lost virtual money. I do thinks its Ginko’s right to not disclose their financial information. To a potential investor is one thing, but even then you dont give all the information. This is typical, a player don’t get their way and they throw a fit. However, I do business with AC through various intermediaries and I have never known her to be accusatory, so maybe she does have reason. I just would like to know why she thinks that. I mean if its solely based on they wouldnt give her certain info, thats a big accusation to make that will affect someones business and she could be found libel if she is making bold statements like that that affect business.

    Did anyone try to contact AC before this story was ran? Insiders this and insiders that. Why not go to the source? I have never had an issue talking to or getting a hold of AC. You can’t simply go by a message board post for a story without getting your own facts or possibly some of your questions answered. That’s not effective journalism.

    Marsellus Wallace

    P.S. Funny, I see P and point out writing style and Coco says Prok, maybe I’m not the only one that noticed then. Perhaps Prok doesn’t want to burn any bridges in regards to this story. I used to do that all the time lol

  9. Prokofy Neva

    Nov 21st, 2005

    Marsellus, sounds like you have a good instinct for stories and a lot of ideas for journalism, and many comments about the kind of stories that can be produced in a game — maybe you might want to start your own newspaper : )

    Newspapers are work, and sometimes, I gather, stories are posted more to get comments to enable the Herald to do more stories, than to be the last word on a subject.

    I don’t write all the Herald’s stories for them, though I’m happy to talk to them, singularly or collectively, at any time. Perhaps they cut and paste *shrugs*. I have enough to do just holding down the blog comments — and it gets tiresome.

    I don’t think the Herald has any trouble getting to Anshe, but sometimes a story might have to go in to be relevant and stay ahead of the news cycle given time differences. I think so many people actually don’t read all the forums and they get so long and confusing that I’m actually glad to have this kind of round-up of what’s going on at the forums.

    Coco, whether it’s me or another Herald stringer or me writing on my blog about Blumfield, you’ll just have to accept that some people do not share either your sensibility or your take on the importance of cooperation with the Lindens. For me, such cooperation all to often leads to cooptation. Blumfield is a Levittown, with all the soul-killing features that implies. If you house is a rose among thorns, so be it, but stop bludgeoning me over my critique of the overall effect of the layout of this town for the sake of one house.

  10. Cocoanut

    Nov 22nd, 2005

    I accept that, Prok.


  11. Marsellus Wallace

    Nov 22nd, 2005

    I know the Herald probably better than anyone else here, next to Uri and maybe even Walker. They publish for the gossip and yes for the news, however they do not go back and interview all the people involved or follow up with the facts and do basic fact checking. In some cases yes, but very rarely. I know this because I was an editor for some time with the Herald, as well as, I been in god knows how many stories on the Herald either directly or indirectly. I know how they work.

    When I first heard about the Herald I was pissed. why? Someone was talking shit about me in a story and no one from the Herald contacted me to check the facts or even allow me to counter what was said about me. Over the years though I have learned to embrace the Herald and help it when I can. Uri has a good thing going, I just think it could be improved upon. Me and Uri have had this conversation before. Uri still got any editor jobs open? I’d like my old spot back lol

    Marsellus Wallace
    A Former Herald Editor

  12. montserrat

    Nov 22nd, 2005

    i will to some extent disagreee with the illustrious mr wallace.
    however i am but a lowly reporter.

    i have had my work edited by mr sklar for about 10 years, and i will tell you that in my experience he is meticulous about checking facts. one time i remember especially he asked me to produce a transcript & source etc for comments i made in an essay, and on other times there has been no shortage of emails with comments like: “mo! why do you think that?”etc.

    i of course feel honored everytime i receive even TWO words from mr sklar. my inbox grows slightly moist and swollen when his mail arrives, and the audio signal changes just slightly to something between a growl and a moan. the letter opens gradually, finally at last revealing something deeply gutteral and anglo saxon: “i don’t like that title so think of something else.”

    perhaps though with the Herald Hotties and those cruises in the mediterranean, maybe he’s just too distracted…..

  13. Prokofy Neva

    Nov 22nd, 2005

    Marsellus, I don’t know the history of you and the Herald, but it seems they’ve covered you more than you’ve written for them. Are you unhappy about that?

    So often what people in a story mean by “check the facts” is “write them up to portray me more favourably”. I think you sound like a great newspaper editor, Marsellus, go for it and start your own? Or crank in the comments on this one, which is a lot easier.

    I think actually I see a lot of interviews with people in the Herald. I imagine there’s only so much they can spend on something that comes after not only RL but SL.

    I fail to see where you really are finding any facts that weren’t checked in any stories lately, anyway. Everybody has talked about how this Ginko thing shows all the signs of being a Ponzi, and they call lit that, in either direct or indirect forms. Why, you don’t think it is?

    Why should the Herald being going to interview FBI agents? That seems off the map to me.

    You seem very sure that no one went to AC, or that there is no tie to AC. How do you know? And reporters don’t reveal their sources, and often find other ways of citing information on background. Ever think about that?

    I can’t see what you feel is wrong in particularly this Ginko story. These are all statements on the forums, for better or worse, rounded up from the forums.

    Perhaps it’s only the headline that seems over the top, ascribing to Anshe that she says “this is a Ponzi scheme”. Guni has said she didn’t go that far, raising questions about how it MIGHT be, but not CALLING it that. SO it would be worth going back to read the forums to see how much that’s the case — but in that case, the headline has been too compressed and maybe even misleading, but there’s nothing in the story quoting her falsely or anything like that.

    I wonder somedays why I am defending the Herald, but…it’s all we have.

  14. Marsellus Wallace

    Nov 22nd, 2005


    You need to more thoroughly read these stories. I am not saying every story is like this. However these interviews you speak of, do you really ever see the other side being interviewed to give their side? It’s rare. Uri knows this, me and him have talked about this before. I think you’re taking my comments as an insult since you wrote this, that is not the case.

    I am not insulting you or even the story, I am just requesting information that so far no one can or has provided. It’s all hearsay that was written to look mostly like fact. I mean if you go by that we might as well say this story is the real Ponzi scam since the information I am asking for can’t be provided which is the basis for AC’s accusation.


    Was AC contacted for her opinion? Yes or no? Going by message board forums is not fact checking or even journalism. That’s taking someone else’s comments on a forum and writing them up as if you interviewed them. Fughedaboutit! That’s not how journalism works.

    So what journalists dont always reveal sources? Journalists get proof from their source usually and have some form of eithics. I guarantee you would not read about someones accusations as big as this without some form of proof being made or some Libel/Slander lawsuit being formed or an attempt to get all parties thoughts involved. Was it you that said leave it to the comments to finish the story or the herald publishes stories to get comments to further the story.. Why do the people reading the story have to finish the story for you? That is what is off the map.

    The herald will publish pretty much anything that’s sent to it. There have been times that I have sent stories to Uri with the promise that he would not reveal who sent it or certain aspects. Like the time he published a yahoo print screen with my yahoo ID on it after I told him not to and I simply sent it to him as proof I was not lying about a story tip I gave him.

    As for the FBI, go back and reread my comment and then answer your own question. It was an interesting point I brought up and they are the only ones besides maybe a lawyer that could answer those questions I proposed which are obviously on peoples minds.

    My point to all this is, instead of trying to be a lazy glory hound, try getting all the facts and then bask in the glory. For all the work of gathering forum posts, you could have contacted the parties involved in the meantime.

    Want me to write a story up about you? Want me to not check all the facts? Want me to just go by other people’s hearsay? I guarantee you wouldn’t like it and would throw a fit. I can if you like though.. Test me. Ask Uri, you’re about to bite off more than you can chew and if you think Uri will come to your aid, you are seriously mistaken. He’ll publish the story if it’s juicy enough. =)

    No I am not threatening you. I never threaten. I am simply trying to make my point. I do beleive you have some thoughtful insight on issues and thoroughly explain yourself in most cases. But a lot of what you do is biased and full of your own opinion versus the relative facts of the story. Which of course is why you’re reacting the way you are in regards to my comments. You’re taking them personally.

    Keep in mind, I simply asked if AC was contacted. Not this big of a deal really to warrent that long of a rant by Prok. One good rant deserves another though I guess. Oh well…. Prok, do you at least acknowledge what I am trying to say? We can agree to disagree, but have my made my point at least?

    Marsellus Wallace

    P.S. Monty, there is a difference between your schooling/scholar work with Uri and the Herald. A big difference.

  15. Prokofy Neva

    Nov 22nd, 2005

    Marsellus, I don’t write all the Herald’s stories. I think your long, heated diatribes here are some effort to get me to somehow answer to your conviction that these are all my stories — but they are not.

    And it isn’t an “insult” because I’m not playing a mafia/dissing/etc. game with you. I just don’t see your point, and it seems to me you just have time on your hands to go and rag on the Herald lately and I’m not sure what your real beef is.

    1. Do you have money invested in Ginko?
    2. Are you related to Ginko in any way?
    3. Is there something about the Ginko set-up — anonymous avatars whose locations are not known, providing huge payouts and interest rates with no public and known means of continuing to make good on that investment — that doesn’t screech PONZI to you?
    4. Many people have decided to be contrarian about Ginko because they hate Anshe. Is that what your issue is?
    5. The story appears to be a summary of the forums. *Shrugs*. So? That’s all it looks like realy, except for some analysis here and there, which is marked as such, not as some kind of “investigative journalism.”
    6. You could ask Uri and others, but I don’t see why they are “lazy glory hounds” here. It’s just a recap of what the community is thinking; Anshe is making accusations big-time; Ginko isn’t supplying any hard info; people are upset. What’s incorrect about that?
    7. There’s no bias that I can see in this story that is merely a recap of forums. Forums might be biased, Anshe might be biased, Ginko might be biased, but a story describing a chorus of biased people is merely that, not itself biased. Or is that distinction lost on you?
    8. What is the real reason for your shit-stirring, Marcellus? I’m still puzzled by this.

  16. Marsellus Wallace

    Nov 22nd, 2005


    I am not ragging on the Herald in the least bit. I am ragging on the writer for not checking the facts. How is Uri to know if you did your job thoroughly or not? If it is a summary of message board posts, then it should have been written as such, otherwise your simply making news of hearsay which is not news. It is gossip and thats what the tabloids are for. Do your own investigation and your own story instead of reposting the forums.

    Look, I’m not going to go back and forth with you anymore about this. As a consumer and member of the Second Life community I think it’s my right to ask the questions I have. You can learn to deal with it and move on. I’ve made my point, others have seen my point, if you can’t then that’s your problem not mine. You remind of me the former leaders of the SSG…

    Marsellus Wallace

  17. Urizenus

    Nov 22nd, 2005

    Mars, what did I just ask you to do?

  18. Marsellus Wallace

    Nov 22nd, 2005

    What you talking bout Uri? I was writing this before I saw your other post. Besides, I would think my post here is me dropping the issue? Wouldn’t you? You should know me. If I say I am dropping it, it’s dropped.

    Marsellus Wallace
    Uri, you’re my hero! lol

  19. Prokofy Neva

    Nov 22nd, 2005

    What are the facts that aren’t checked or that you feel are wrong, Marsellus? I have yet to get a straight story from you on that.

  20. Marsellus Wallace

    Nov 22nd, 2005

    If you want to discuss it, we can do so in game. I’ve said my piece.

    Marsellus Wallace
    I’m such a pain in the ass I hear. I should just go away. lol (inside joke)

  21. KillerMonkey Spire

    Jan 9th, 2008

    Not to re-vitalize an OLD posting, but Anshe was right, sortof:

  22. Prokofy Neva

    Mar 10th, 2008

    A useful time for a Necro Post.

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