by Alphaville Herald on 23/02/07 at 10:58 am
The Journal of the Business Law Society at the University of Illinois College of Law is running a well documented article on Second Life’s Ginko corporation, which claims to have the equivalent of $475,000 US invested in it but which some have called a ponzi scheme, Meanwhile, Philip Linden has comparedGinko to the Grameen Bank of Bangladesh. Finally, someone is calling out Philip on this outrageous attitude. From the JBLS:
More curious than people’s willingness to give their money to Ginko, is that Linden Lab does not seem to find anything worrisome about the venture. Linden Lab’s CEO and founder, Philip Rosedale, believes that banks can exist within the virtual world of Second Life without regulation. Rosedale likens banks like Ginko to Grameen Bank of Bangladesh which makes small unsecured loans to the very poor to help them start businesses and work their way out of poverty.
Meanwhile, a well placed and reliable Herald source tells us that Ginko is in fact a ponzi scheme. We are not in a position to pronounce on the matter, given the real life legal implications, however we think it is about time for Ginko to show some transparency. Where is the money!? Open the books, and show us where the money has been invested. Is it in other Second Life businesses, or in things like sweet new rides, as our source insists? More to the point, if it *is* a ponzi, will Linden Lab be liable? From the article.
Given Ginko’s complete lack of transparency, if it turned out to be a swindle, it would be very hard for depositors to track down the person or persons behind it. Even if they were found, there is no guarantee that depositors would be able to obtain redress. If this were to occur, it is likely that the depositors would sue Linden Lab for not protecting them from fraud. By not taking efforts to ensure that commercial activity in Second Life is conducted in a transparent manner, Linden Lab is in essence putting their stamp of approval on ventures like Ginko. Linden Lab of course absolves itself of any liability for the actions of Second Life users in its Terms of Service Agreement, but there is no guarantee that the Terms of Service Agreement will hold up in court. If a court determines that Linden Lab is liable for fraudulent activities that take place within Second Life, they may be overwhelmed with suits. To avoid liability, and governmental regulation of the commercial activities within Second Life, Linden Lab should develop rules and policies that ensure commercial transactions between users are transparent and legitimate.
See Virtually Blind for further discussion and an observation that, with yields down 60% in 16 months, it does not look good for Ginko investors.