Bankplay Banned – High Interest L$ ATMs Must Go !

by Jessica Holyoke on 09/01/08 at 7:37 am

Linden Lab reacts to Ginko Financial by declaring permanent spacebuck bank holiday?

by Jessica Holyoke

take the money and run

Tensions mounted at the SL Capital Exchange/JT Financial as Linden Lab reacts to the Ginko Financial Collapse.  Ken D Linden posted on the Second Life Blog today a new policy in regards to the in-world banks.

"As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter."

While it is clear bankplay is now on the list of banned activities in the metaverse, alongside gambling, ageplay, and other sorts of broadly offensive behavior, the fallout from this decree remains to be seen.

There are a few days lead time before the policy is put into place.  More information follows on the Support FAQ.  On the FAQ, the Lindens report that its not just the objects, but Residents who offer interest or rate of returns for investments as a scheme who can be suspended, terminated or lose their land.  ATM-less banks would not be available in the future.  When asked if this would cause a bank run, the response was "It might.  We unfortunately have no control over this.  If in fact there are insufficient funds to cover what’s owed, that would confirm that this type of “banking” activity is inherently risky and flawed, and should be shut down." 

While stock sales would not fit under either of the banned categories, the FAQ has this to say: "As of today, this policy is generally focused on objects and schemes that involve real-time transfers of L$ and payment of interest or rates of return.  Exchanges may or may not do this, so they may or may not be covered.  In addition, we reserve the right to remove any objects and take action against any Residents who are violating U.S. or other laws.  If you are unsure whether a business you’re operating abides by applicable laws (e.g., banking, securities laws), you should get a formal legal opinion, from a personal lawyer acting on your behalf. "

The Financial sector is responding in various ways.  Some banks, such as BCX, SLIB and JT Financial are currently shut down while promising to pay deposits out in the future.  Those banks that are not dependent on the exchanges would seem to do better than banks that are heavy into securities, such as Midas Bank was.  Solutions being proposed include moving the banks off of the Grid or partnering with a chartered bank.  Ken D Linden writes: "We will not apply this policy to companies who submit a registration statement, charter, or other applicable license from a governing regulatory authority, or who are merely conducting marketing or education, but not accepting payments." 

18 Responses to “Bankplay Banned – High Interest L$ ATMs Must Go !”

  1. Kahni Poitier

    Jan 9th, 2008

    Good riddance!

    Of all of the shady Ponzi schemes in SL, this was the worst.

  2. SqueezeOne Pow

    Jan 9th, 2008

    yay! More of the always competent and thorough Linden involvement to regulate us because we’re too dumb to read the fine print and use common sense ourselves!!

    I’m glad I have the government to watch out for me because there’s no way in hell I’m going to take that responsibility myself!!!

  3. janeforyou Barbara

    Jan 9th, 2008

    I allways told it.. dont trust anyone with your L$. When i was a newbbe and finly got my land i trusted a person with 150 KL… he run off with it.I just herd a storie that a naiv newbee that trusted a hightly respekted person in SL got a gift from this person in L$ and got banned cuz Linden Lab found out the mony was fraud/false/stolen or what ever. I can understand wery well that Linden Lab are closing down the “fake” Bankers and frauders in SL, but i can not understand that innocent naiv rather new useres get banned for getting a gift from a respected and trusted person with lots of mony to give away.. and it dosent matter if its 10L or 100.000 L..i wonder how many naiv and innocent ppl got banned for this?

  4. TW

    Jan 9th, 2008

    I’ve never understood the ignorance of people regarding this topic anyhow. Placing your “L” dollars in the account of someone else is not banking.

    Irony as it is, the only reason to even use a bank in real life is to protect assets via an insured source. Some legal benefits include being able to withdraw such deposit via a checking system for easy payment. This negates having to withdraw the money, go down to the person owed, and pay them in direct funds. All of which is FDIC insured.

    In SL, the monies, although real in terms of the funds behind them, have no real need of such a so called protection within a bank. Bank drafts via “check” are not needed to pay debt in SL.

    There is no logic whatsoever to want or need a virtual bank within SL. None. There are no direct benefits, thus the reason such so called one member “put your “L” in my account” banks offer no real service to those they come in contact with.

    None can be considered a bank, none can be considered insured, none even offer any services that are needed within Second Life.

    I’ve personally seen people lose money putting it into a so called ATM vendor prim. Never to be able to retrieve it again.
    Once the money comes from your account, and goes directly into another persons account, Linden expresses the transaction as a “Gift”. Thus, no legal reasoning whatsoever to pay back such funds let alone any so called interest.

    I design in SL and enjoy working with other educated individuals around the world. I offer my time, my education, and my commitment of helping others. This is what is offered
    by myself within SL. It holds value, has merit, and gives more than a guarantee of return on investment.

    People whom scam others via so called “banks” (again nothing more than another persons account), or virtual gambling prim that take money from others, have no reason to be in Second Life. They create nothing, offer nothing. If you are not a skilled person in SL, it may well help trying to further your education and try providing something of value. This doesn’t necessarily need to be in the form of a prim. But to do nothing constructive to help others in SL is a pure waste of time IMO.

    It’s interesting to note that while I do not agree with a dictatorship in SL, I do not agree with the unabated fraud I’ve witnessed as well. Any direct involvement by Linden Labs to run off those that only offer theft and deception is applauded.

    We don’t need the fraudulent account holders calling themselves banks, we don’t need a fraudulent “Federal Reserve System” either that is not governed or even part of the Federal Government, but indeed a separate entity who decides the fate of others.

    I applaud the Lindens in this case. I wish they would have been
    more acceptable to have had a strong stance against fraud in SL
    for the years that have passed.

    In this case, the only ones hurt are the ignorant. But there are cases of legitimate work/business in SL that are as fraudulent as well and the Lindens have done absolutely nothing to curb the issues, or assist in removing those doing the harm.

  5. Bee Mizser

    Jan 9th, 2008

    Good Riddance.

    Now we may see RL (regulated) banks coming into SL, offering realistic banking for residents with accounts that are secure, offer realistic rates of returns and generally do the economy good.

    Whilst I feel for those people who will inevitably lose out in the “run” after the bank owners have closed down the ATMs I feel that this can only benefit the SL.

  6. SL Kid

    Jan 9th, 2008

    Why would a RL bank even consider coming into SL? For a 10000L account = approx $40USD??? And why would anyone want a RL bank to enter into SL? To open an account in the US these days, you have to submit personal information according to the US Patriot Act. How are they going to identify you as a US resident and a person in good standing instead of of a money-launderer. The only way for them to do that is to get your Social Security number and other identification information, ie., driver’s license, etc. I don’t think too many bisexual furrie hermaphrodite avatars are willing to do that. Or avatars that sell their amorous services. By the way, this also allows the Feds to tax your interest income.

    I think good riddance to these exchanges and “banks”. The people who invested in them are either ignorant and/or greedy. Anyone who deals with these entities knowing that there is no legal framework in SL to enforce contracts or to address grievances, knew the risk they were taking and if they lost money, I’m sorry, but that is what happens when you give money to a stranger and expect them to give it back out of the goodness of his/her heart.

  7. Blak Hax

    Jan 9th, 2008

    Protip to the banker fags:
    Start RIETs with mutual land ownership for the investors, or even give them chunks of land based on their investment size. You’ll still be able to make money but wont be affected by the Linden Labs’ new rules.

  8. Curious

    Jan 9th, 2008

    Bee, when you say “realistic rates of returns” I take it you mean they will charge you a monthly fee of US$3 to US$5 for the privilege of having an account AND charge a per-transaction fee on top of that. Oh, and of course there is the US$1.50 charge per transaction for using a bank machine.

    There won’t be any real banks showing up in SL. At least none that offer L$ accounts. It isn’t worth it to them.

    Besides, what do we need banks in SL for? It isn’t like 1 million L$ takes any more space in your virtual purse than 1 L$ does.

    It isn’t for protection. There is no deposit insurance in SL. You can’t be pick-pocketed. There are some forms of fraud in SL (but many people have argued that SL banks are one of those forms).

    If you want to protect your L$ by spreading them around, create a collection of alts with extremely hard to guess passwords (like 16 characters of gibberish) and only use those alts to transfer money to/from your main avatar.

  9. Exponential Growth

    Jan 9th, 2008

    Its clear that Dan Linden is a lawyer, lawyers generally have zero economic understanding, they live by the idea that the only way to make money is to sue someone for it or steal it, a modern form of pillaging and conquering.

    SL is an exponential economy. It grew at 1000% last year. Offering 20,40 or even 80% annual interest on deposits is not only “sustainable” if the bank is responsibly managed, it is a rather miserly interest rate to pay if the bank is able to grow by 1000% in a year on that money.

    SL is exponential in its growth because its an info economy. The only scarce resource here is our creativity. If LL says such interest rates are “unsustainable” then what they are really saying is that WE are no longer creative and SL is doomed.

  10. Aloe Stradling

    Jan 9th, 2008

    Every time someone says the words PONZI SCHEM take a drink.

  11. Kahni Poitier

    Jan 10th, 2008

    Exponential: How do these banks make money besides deposits?

    What, giving loans? Mortgages? Value-added services?

    It’s a ponzi scheme, and you know it. Quit defending it.

    It’s fraud, and you know it.

  12. RoFLKOPTr

    Jan 10th, 2008


    “Besides, what do we need banks in SL for?”

    Are you retarded? Now, don’t get me wrong, I do believe banking quasi-real money inside a not-real-at-all game is a STUPID IDEA, but, even stupider, is your lack of ability to comprehend what a bank is for. What do you need banks in RL for? Is it for a place to keep your mounds of jewgolds? No… I would actually prefer I kept my money with me, simply because it is more accessible that way. Is it for security? Maybe, but you can never trust anybody 100%. Is it for revenue? YES! YES YES YES! By depositing your money into a bank, you are basically investing in that bank, who, in turn, gives loans, purchases real estate, etc, and the interest and inflation it makes on that goes back to the customer. The same thing goes in Second Life (except loans seem to not be given, and real estate is portions of a hard drive). I lose hope in humanity when I read comments such as yours failing to connect two basic principles of economy: “Interest” and “Income”. When interest is high, income is high. See, the few smart people that play SL for SRS BSNS have made the connection and invested large sums of cash, and made quite a bit of money, and cashed out. It’s still a stupid thing to do, due to the outrageous risk involved, but it’s still a feasible option. I hope I made those points clear to you, and, please, before you make another presence on my internets, lrn2smart. kthx.

  13. TW

    Jan 10th, 2008

    “I would actually prefer I kept my money with me, simply because it is more accessible that way. Is it for security? Maybe, but you can never trust anybody 100%. Is it for revenue? YES! YES YES YES! By depositing your money into a bank, you are basically investing in that bank, who, in turn, gives loans, purchases real estate, etc, and the interest and inflation it makes on that goes back to the customer.”

    This is insane. Since what date in history have you accomplished a decent return on investment with a RL Bank (Savings/Checking)or even the in-house security investments?
    What country? You certainly didn’t do it in the last 10 years in the United States. Give me a break. Another cop out for wanting a fast buck. Real investors do not invest into bank accounts. In fact, they try to stay as far away from them as they can. You are not investing into a bank by depositing your money there either. I hope you have better banking and investment portfolio ideas in real life or you are doomed to failure.

    Indeed, no reason whatsoever for a virtual bank in SL.


  14. Witness X

    Jan 10th, 2008

    All I have to say is.


    ITA, people get fucked over by scams earlier than expected.

  15. Tristin Mikazuki

    Jan 11th, 2008

    Not one of the whiners ever thought its my god damn money and I can do with it what ever the hell I want.

  16. Jew Nigruson

    Jan 12th, 2008

    lol @ Intlib saying one won’t earn money by putting into a real life, FDIC-insured bank if its in the U.S. Ever heard of a fucking Certificate of Deposit? Oh right, you were too busy stealing money from your father to pay for your dying “business” to l2p real moneys.

  17. Brent Wunderlich

    Jan 15th, 2008

    This is a game. I should be able to put my L’s where ever the hell I want. If it is a scheme… so be it. Then I get screwed. LL needs to stay out of a game that they say should grow by itself.

  18. Timothy Zapotocky

    Jan 22nd, 2008

    Actually SLIB is still in business, although they are of course going through a difficult period at the moment. They fortunately had a thriving real estate operation going, and they also did some consulting, so even now they still have some actual virtual cash flow. (I am a member of the SLIB customer group, although I never actually deposited any funds with them: I only bought land from them.)

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