Going Like Sixty
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Second Life has been forced to close all of their banks because of fraudulent business dealings. Linden Lab, the owner of the popular virtual world, had taken a hands-off approach to the virtual banks, saying they were not responsible for actual transactions, just the software. However, they eventually shut down all the banks that were unable to prove a government registration statement or financial institution charter. Apparently none could.  "The so-called banks are not operated, overseen or insured by Linden Lab, nor can we predict which will fail or when. And Linden Lab isn't, and can't start acting as, a banking regulator." The company wrote that "these 'banks' have brought unique and substantial risks to Second Life, and we feel it's our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse--leaving upset 'depositors' with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy."
The about-face came six days after Technology Review posted a story that described avatar losses and cited the possibility that one virtual-bank meltdown may have produced aggregate losses of some $700,000 in real money to many hundreds of Second Life "residents" in a manner that would be illegal in the real world. (See "The Fleecing of the Avatars.") "I think the timing may well have been due to [that]story," says Ben Duranske, an Idaho lawyer who has been closely following the complaints of Second Life participants.
(technologyreview)References: technologyreview Filed In: |
Avatar Losses Close Banks
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Shady Deals Close Second Life Banks
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