Securities Act of 1933 and Virtually Public Companies

And were I to guess, I'd say the TOS would easily be struct down regarding the worthlessness of the L$ because:

a) as was mentioned above, LL's sale of land for both L$ and cash
b) the ability to "pay" your land fees in L$
and most importantly c) the fact that part of the root of their marketing campaign and most public discussions is that SL users can "make real money". http://secondlife.com/commerce/

J

All economies are exercises in risk-taking, and all currencies are efforts by governments or (mostly in the past) financial institutions to shore up the risk and induce the population to have faith. The Linden, because of the circumstances, is simply more risky than most of these exercises.

Does the '33 act pertain here in SL? Only if someone decided to create a test case and a court finds that it does - either wholly or partially. Until then, no - because "recognition" is always an important and overlooked factor.

Ask your lawyer. I'm sure his answer will be pretty much the same as mine. The law is pretty settled.

You are forgetting that not everybody that plays SL lives in the United States. Having this act apply to SL would be absurd and very hard to enforce. Besides, the world of Second Life isn't the United States; technically these companies are based in the world of Second Life.

I wont get into the value/worthless debate of the L$, as that's still to be seen. However as SL is hosted by a US company, the hosting servers reside in the US, then by extension the laws of the US apply to SL.

Any company or corporation that exist in SL would automatically be subject to US laws. Not that's assuming if the US courts were to recognize a company in SL as a legitimate legal entity...that part is still a big question mark.


- Newfie

It doesn't matter where the company is based -- US, Europe, etc ... there are laws which spell out the registration and approval requirements a company must pass before it can market or sell a security to people living in the U.S.

I would also note that the SEC is not the only issue here -- states have their own laws on what companies need to do before being allowed to market securities to people residing, or even visiting, within that state (see the Uniform Securities Act).

The question is really whether this can be considered a real security. I can see multiple sides to the issue. There will be a lot of speculation on this issue until it actually hits the courts.

you create a corporation by... of course... legally incorporating. You don't become a corp just by talking about it.

So an SL corporation could exist -- it would just be incorporated in the real world, in a real world country, by real people. It would simply be ** operating ** in SL.

so no, I don't see any question mark.

I'm afraid that the location of the servers dictates the laws that apply to it, there is no separate SL nation. You are also subject to the laws of where you are physically. It may be perfectly legal to make and watch a porn video with a 12 year old girl in Uganda( I have no idea if it is or not, just an example) but it is very illegal to download and watch in Texas.

This is not true.
Value is ALWAYS and ONLY perceived value.... and furthermore
it's perceived value fluxuates according to an individuals needs
and desires.

If you offer a 3yr old a $100 bill or a piece of cake, the child
will most likely assign a higher value to the cake, and take it.

If you are stranded on an island alone and find a chest with
$10,000 and some containers of fresh water, I'm going to bet
the money has no value to you the entire time you're
on the island.

In either case what the government says about the "value"
of a currency is irrelivant... it's always perceived and fluid,
and is so based on a single (or a group) of individuals... and very
rarely EVERYONE at the same time.

Gabrielle

Let's take your disagreement to it's root. If your president came on the news tomorrow and informed you that the nation's currency was now deemed to be worthless, and all taxes would now be due in gold.. how would you preceive it's value from that point on? How do you think your fellow citizens would preceive it? Do you believe that you would be able to trade your currency for enough gold to pay your tax? Do you also feel that you would still be able to trade your currency for food and shelter? Why or why not?

Of course my green $20 piece of paper bill would take on a new meaning/value
I'm not arguing that. But as long as I can go across the street and hand it
to another guy (who takes it because he wants it)... and gives me a loaf of
bread, then it does have value to me!

"Value" can be one-sided as well... I have a junked up old computer
that has no value to me.. I put it out on the front lawn next to the
trash, but found it was taken by someone before the trash collector
came. Obviously it had value to someone.




I don't know, but this is irrelivant.

Anything that someone else thinks has value to them, does have
value... even if it's only valued by that one person.

In our First Life I can offer you an amount of US dollars, Euro, gold
nuggets, diamonds, acres of land, new IBM laptops, etc, etc that
YOU will assign your own value to and probably give me an amount
of "gold" for which I can use to pay my taxes with.

Just because the government says the paper is now worthless
doesn't mean that it is. It's only when I cannot find anyone else
who might continue to value it and give me something in exchange
for that paper, that it truely becomes worthless to me.





Answered above.




Gabrielle

Personally I think that if they do say it's worthless then they
are only saying that to cover their legal butts.

Because at the same time that are saying THAT,
that are saying this:

"Make real money in a virtual world"

here: http://secondlife.com/commerce/


and go on to point out how you can convert
$L in to $USD.

I think this should obviously state that they are
aware that (to some people) the $L does have
value.. and infact they are using that fact as
a marketing ploy to get more people to join SL
to try and earn that (worthless) $L.

We residents KNOW we can convert between
currencies, and are doing so! -- $L obviously
has out-of-world value to (many of) us.

Gabrielle

I think when we look back from ten years in the future we will see today as a golden age of freedom. Both in SL and on the internet in general.

In SL, I think there will have been a total clampdown on the abuse of IP of every sort, with regular policing inspections. I believe any in-world financial operations will have been pulled into financial regulation and control. The international legal difficulties involved will have lead to different parts of the grid being "legally located" in different jurisdictions. It may be necessary to re-log when crossing a border. Anonymity will not be available in all jurisdictions, obtaining an SL identity will involve registering it with a government agency, linked to your RL data. Moving funds into less financially regulated parts of the grid may be restricted as anti-money-laundering provisions. All conversation logs will be under continual surveillance, justified as an anti-terrorism precaution.

These things will not apply only to SL. The internet in general will be similarly controlled, regulated, divided.

All this will come about in the name of protecting citizens from terrorism, or from financial abuse, and in preventing tax avoidance etc etc.

I make no judgement as to whether such developments will be good or bad. But I think that unless we get a grip as our governments drift us in these directions, we will have no right to complain.

All the freedoms we now enjoy (and probably abuse) will seem like nothing more than a dream.

So my opinion is, we should enjoy them all while we have them, and not bother with threads like this, tending to hurry the day when we lose them. It'll happen soon enough.

Yes I'm glad that people preceive a value to our funny money. This doesn't change facts though. Since we're quoting, let me quote the Terms of Service:



Fictional currency. Can vanish at any time, at Linden Lab's sole discretion. Make no mistake about it, Linden Lab (our federal government) values this currency at ABSOLUTELY ZERO. Nothing. In spite of any marketing hype their web site may contain about being able to trade it on third party sites, they state quite clearly, right here, that it is WITHOUT VALUE. It is beyond even worthless, it is FICTIONAL!

Instead of trying to convince your fellow residents on a web forum that your funny money posesses value, what you SHOULD be doing is trying to convince Linden Lab! When the government stops insisting that its national currency is merely a work of fiction, acknowledges that it has value, and starts looking to new ways to get its welfare payouts besides freshly minted money, we can talk about value. Until then, we're very fortunate to have third party markets where residents are willing to exchange fictional funny money for real money.