LL’s New “Banking” Policy Should Be Amended to Include Stock Exchanges, Etc.

What people have failed to mention here though is the benefit that a stock exchange gives new businesses who otherwise wouldn't be able to raise the capital to start a new venture. Taking away stock exchanges, takes away the ability to access the growth that might otherwise be possible.

Lets consider other possible scenario's whereby people can be defrauded, there are hundreds, should we start banning things left and right?

Mr Fraudster start a business and offer shares in a business to potential investors, they are making an interest based return on their investment but the fraudster can still take their money and run. Should we banned shared groups?

Lets say a fraudster offers an affiliate scheme that supposedly pays out commission for you selling their products but doesn't, should we ban affiliate vendors?

Someone sells you a plot of land on their estate but takes it from under you after you pay them? Shall we ban island leases being sold?

Heaven forbid someone offers you an actual item that turns out to be nothing like it said it was going to be, or one of a thousand other things that cost you money and you end up not needing or not even wanting. Should we ban all transactions?



Why do you doubt this if there is money to be made on each transaction? Its a powerful motivator



I don't really follow this assumed logic, what evidence is there of this predicted banning and if its going to happen anyway why are you even bringing this to light in a thread?

This point has been brought up often.

Please explain the scenario you mean.

What business requires this kind of supposed capital?

You can start any business at all in Second Life for less than the limit on most people's RL credit cards.

Being new to SL, you may have missed the running of at least one large exchange in SL with all depositors/investors funds when operation was shut down and the owner stole all invested funds. Then there have been at least 8 or 9 "CEOs" on various exchanges which have run off with invested funds leaving their investors with nothing. Then there are many questions as to the level of fraud produced via theses exchanges. The owners of the exchanges give themselves "god" powers and simply delist on a whim. There is neither oversight nor regulation, which causes a great deal of headache for those who are stolen from or lose out and daring to question an operator often results in the freezing of your exchange account, resulting in a total loss.

A fraudster starting a small scam and getting a few people to hand over some L$ is small in comparison to the automated stock exchanges in SL where literally hundreds of thousands of USD$ are moving around everyday, often vanishing with little to no explanation of why and never a verified explanation of why. Why? Because, like the in world banks, they are not regulated or overseen in any official way.

The risks, scams, possibility of break real world laws, negative press for SL, possibility of legal suits involving LL far outweigh the positive benefits of such exchanges. Want to start a business in SL? Charge $100 to your Visa, buy some L$ and you are ready to go. You don't need to start a new project with 10 sims right out of the box. Can't afford that? You should probably be looking for a job in real life rather than spending time in SL.

/me smiles

i have had some very interrested people for my product but what they wanted requires an addition 1-2 month of full time work and purchase software as using illigal version is a simple no-no wich i can`t afford as it is

i`m not talking about pennies of interrest but going into the thousands of $USD for a more developed system wich could be hosted by them self and that is only a fraction of the market the first and main product is aimed for, along with more solutions and expand into other online worlds once they are being released, the potential is huge and that is said by the interrested parties, not my words

there are scammers every where, but there are some times a few who actually need these sort of services and the help of others to accomplish their dreams (/me raises a hand )

i`m not talking about to start up some vague SL company but go RL aswell and bust my ass to make it happen and share the rewards with who had the guts to believe in my little dream

This is totally non-specific.

From what I can make out of it you need a few thousand dollars to purchase a 3rd party software tool.

Which you wont be buying in Linden Dollars, obviously.

SO this sort of investment would be better facilitated by paypal anyway.

Linden Labs isn't banning Real Life money transfers via Paypal.

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I know one thing for sure - I wouldn't trust someone who didn't have a $5000 limit on their credit card with a few hundred dollars of my real money.

Hiya
*smiles*

I'm guessing you are talking about the exchanges? I wish you the best with your real world business, but if you are raising funds via one of these stock exchanges for a real world company, then things get even shadier. In the case of out of world businesses raising capital on such exchanges, there would HAVE to be full real world regulation on such an exchange. This would by far no longer be "fictional". It would be a real world company raising funds on an in world exchange. I've already seen it happen on several exchanges, and it is more than likely highly illegal. There is no longer nay possibility that you can tell the FEDs you were just "playing a video game".

I wish you the best on your project though and maybe I misunderstood you regarding your specific project

true, but as the wse has their followers and the backend to do something like this, they won`t be holding to the money wich will sit in my account and if they screw up, i`ll have the records on my pc to continu

paypal or transferring from paypal to paypal, the cut they take is almost the same, in L$ it can also be used to pay land rental and uploads while only cashing out when needed

if there was some one wich would do the same as wse but only trough paypal, i`d gladly rather use their service, just want to reinvent the wheel as wse profides a way to make reports/share tracking etc etc etc

i know where your coming from tho, it is to easy to rip off people who actually want to invest in something solid to make a return and that the more run with the money, the more it will hurt the few who actually try to make it work

at the end of the day, stocks are a gamble, virtual or real life unlike the bank term wich stands for safety for your money (forget that market crash while reading that )

*sigh* I hate disagreeing with you, Colette, because there are always consequences, but unfortunately you are confusing a few terms. You are right about INTEREST on BONDS, but DIVIDENDS on STOCKS are not the same thing.

Bonds = a certificate of ownership of a specified portion of a debt due to be paid by a government or corporation to an individual holder and usually bearing a fixed rate of interest. Bonds issued by a company bear a FIXED RATE OF INTEREST.

Stocks = a. the outstanding capital of a company or corporation.
b. the shares of a particular company or corporation.
c. the certificate of ownership of such stock; stock certificate.
d. (formerly) a tally or stick used in transactions between a debtor and a creditor.
Stocks pay based ON THE PROFITS OF A COMPANY WITH NO FIXED RATE AND NO GUARANTEED INTEREST.

**Just to re-iterate, in case it is not clear: interest on bonds is paid out on the basis of a fixed interest rate. Dividends, on the other hand, are fundamentally different, and are only paid out in the event that the business in question makes a profit.**

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Now, let's look at the tier rental scenario I presented.

I pay money for tier. I then give it to someone else who pays me lindens over time for the use of that tier.

I pay money for lindens. I then give those lindens to someone else who pays me lindens over time for use of those lindens.

Both scenarios are the same thing, because lindens are intangible objects in the same way that tier is. Call it rent, dividends, whatever, it is money paid on an investment. The only thing that keeps tier-rental from being an interest type payment is that tier/land prices fluctuate, which means there is no fixed ratio of payment to tier/lindens/US$ invested. It acts much more like a dividend in that you may sometimes fail to profit.

For that reason, LL has a lot on its plate to consider regarding their decision to step into regulating.

oh i know, once i`ve got some more things done, i`m going to my what ever it`s called (bank of commerce?) to see how this would stick regarding taxes and the likes to startup with the use of fictional money (hey, can i pay tax in L$? ) as it has to be registerd some how as an investment

this is to startup a company, not to raise money for one

Oh please, spare us this drama. Cripes.

Back on topic, the potential for widespread fraud of this nature makes this 'industry' ripe for banning outright. Pan, I was describing exactly what you said - Midas' fall because Luke decided he didn't want to pay Midas interest on his investments. My math based on what has been posted elsewhere is that Luke owed Midas about ***$20,000 USD *** worth of lindens and didn't pay. Then he decided for himself that Midas must be insolvent, and swooped the opportunity to delist Midas. I sincerely hope that Midas is doing something about it, but the whole thing reeks, and not just because of "god powers" to declare solvency/insolvency.

And though there are other organizations that actually have some integrity, the investment activity needs to be taken out of world and governed by RL contracts, especially when you start putting 3 or more zeroes in your digits, before the decimal point! People don't get it - these inworld transactions are considered GIFTS, and it's harder to seek recourse when a deal goes bad.

You are too bound up in details. By functionally the same thing, I mean a rate of return on your money which is unregulated.

*Bank Balance - Yields an interest rate
So I put money in the bank, they give me a certain amount of money back for leaving it there.

*Bond - Yields a fixed dividend
So if I buy bonds, they give me a certain amount of money back for owning the bond and not selling it.

*Stock - with a variable yield based on profit
So If I buy a stock they MIGHT give me a certain amount of money back for owning a stock and not selling it.

Therefore they are functionally the same in that regard. A certain return is paid based on the fact that THEY have your money.

Thus they are all "Interest bearing" as specified in the ban.


A stock that yielded no dividend (or other payout) - ever - wouldn't be the same.

Anything which requires sufficient volume and is operating on thinner profit margins. (Read a great deal of SL businesses)

Anyone in a situation unable to afford the investment themselves, whether in a country where the linden is worth significantly more than to you or I or on a tight / uncompromising RL budget.

I could go on to specific instances but I don’t see what that would add to the actual debate on the stock exchange policy itself.




I am not new to SL, this is my third visit and I have run in to people who have been burned by the ginko scam and many others in my travels here. Though I don’t think how long someone has been in SL should either detract or add anything from the actual meaning of their statements.



So a smaller fraud committed many times is preferable to a large one committed once? Why because the large one catches more headlines?

Believe me though many people who have had whole businesses uprooted on estates, would take great exception to you disregarding their time and money invested in running, creating and developing it. Let alone the attachment people have to communities and homes when they disappear overnight. As you might guess, this was one of my reasons for leaving SL last time.



That is your opinion and your entitled to it. My opinion is SL is a creative place where financial constraints should limit someone as little as possible to achieving their success.

I would also disagree in that you do need to start with x number of sims out of the box otherwise the venture simply isn’t profitable in many cases, buying and selling of land, currency, renting and indeed a lot of shops are operating on very thin margins. Simply based on volume, you need the capital to advertise, promote and build the foundations of a successful business. But then it depends on your aim in SL. Fun or Profit, which is what a great deal of this argument comes down to and indeed your time available to invest in the business.

Basically any direct monetary return based on the Amount of investment.

Be it stock, bond, bank account, or stamp collecting -

Is functionally "Interest bearing" in the larger sense of the term.

Well if you are going to say people are forgetting about it examples would help. I am trying to contemplate what business I couldn't start in SL for less than $3000 US.

And unless its land related, I cant really conceptualize one that would cost more than a few hundred US.

Now large island buying schemes? They can finance themselves through RL means. You cant buy islands with Lindens anyway.

If this is true,

Then Luke is a crook and WSE is a definite scam.

You can start a business earning pennies if you really want but if your here to make a fair profit, who would 'choose' to. Quite aside from the fact not everyone can or indeed wants to invest 3k dollars in their business to start with, single moms, students or struggling artists in general (which covers a large section of SL), the average person in many countries of the world, whereby 3,000 US would be a kings wage.

Personally I can’t wait to tier up, so each plot of land becomes more valuable per prim, that is one of the more crucial things that helps margins but, to add even more weight to my argument, requires more initial capital.

As to a very definite and more personal example:

I don’t know if you own land on any large scale, it may be difficult for a non land owner to really comprehend what margins land owners have to deal with, unless they are very lucky or extremely clever to resell land. Personally I am renting plots to people, developing them and offering them for a fair or discounted price in a nice area. To do this requires a great deal of capital to purchase the land. Now I’m not going to sit here and give you MY figures publicly but....

If I were to say someone budgeted for each 8192 plot of mainland land to make 30 dollars a month half full, fully independently, you’d probably be shocked but would have some idea of the competition and margins involved, if you take into account the building, design, staff, land tier costs and indeed man hours involved.

Of course the biggest assets, the lands value is always in the business and growing in the right area’s.

If an investor came along right now and said to me, I’ll inject x amount of money in to your business but I want this silent share, I’d probably go for it to be honest. In fact the more I think about it, the more I’m thinking I should go public for more explosive growth.

That is a bit irrelevant - since the costs are the same no matter where someone is from.

Were talking scams in the 5 and 6 figures US here, they simply are not the costs associated with buying an island.

LL also did not ban business partnerships in any form. There is no rule saying 20 people cant get together an invest in an island.

The rule is they cant pay interest on that investment.

fully agree with you, real or virtual, if any stories are true, i`ll be damned to use his system and just suffer a forum warning while asking for some attention with an ad post in a sub forum

would be like saying "i don`t deal with crooks unlessit suites me" heh

I hate to disagree with you, Colette, but details matter. A dividend on a stock is NOT the same as an interest bearing instrument. The key difference is that a stock exchange and the issuer of any given stock don't promise a return on your investment. The buyer KNOWS that it's a gamble.

I agree with you that SL "stock exchanges" have the same potential as "banks" to be scams for the unwary. Unfortunately, I don't think they are covered by the terms of LL's bank ban.

We might say that SL stocks fall somewhere between casinos and banks. Investing in them is a gamble (but it doesn't depend on random chance, so the gambling ban doesn't apply) and you aren't promised a return on your investment (so the banking ban doesn't apply).

They fell through the crack.

Since, as you say, there are plenty of existing ways to finance an SL business (savings, credit card, loans from RL friends, etc.), it may be time that SL stock exchanges went the way of the casinos and banks.

Sometimes I wish the WSE would come in and post on these forums.

http://www.wselive.com/research/announcement_detail/3217

Luke did not decide Midas was insolvent.

No bondholders received the November interest payment (not just Midas).

And the interest Midas would have received was closer to 3,000 USD.

I wanted to correct what I said. The interest payment was not 20k, but that would be about the total debt that was allegedly owed to Midas. I don't know who what or whatever, all I know is that Midas was delisted, the assets are tied up in the aptly named WTF and a lot of people are getting screwed.

The basic concept is the same though

I give you money with the idea that not only can I get my money back, but Ill be paid for the USE of my money.

A bank account , a stock, a bond, its all the same - they are simply different mechanisms in place to convince people to put their money there.

The intention is to pay people a return on that money.

Sure they all carry different risk but thats a consequence rather than part of the design. You don't design stocks to fail.


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To go into the more detail specific part

In the "stocks" model, the company have an obligation to their shareholders to succeed. Which leads to an expectation of a return.

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I really think that except for stocks that rely *solely* on increased stock price (with NO direct return), they are *ALL* covered by the ban.

this has almost nothing to relate to the debate

using L$, people can play it as a game for some side incoming for sl, IF they make some money, they can use it to spend/invest in SL instead of brining in new money by buying L$

also from a business side, people don`t have to pay taxes untillcashing out and even then it`s to a certain limit per country to the amount so it could be income trough a hobby and not taxable (just requires alot of time to tunnel it all out), also while in L$ it`s untaxable

some benefits and disadvantages if done as a hobby or to actual raise moneyt ho

/me stops rabbling

Its not irrelevant at all, i'd wager a good percentage of SL doesn't even have access to a cc with a clean 3,000 limit.

Additionally, if your comparing the costs relative between two people, then again i'm going to strongly disagree. In simple terms 3,000 to some people is chump change, others affordable and others way past their budget.



Again i'll only briefly touch on the point that many smaller scams are no better than one large one.



Very true but we are talking about stock exchanges and investors here though, they have much more in common with partnerships than a bank does.

Practically from an individuals and risks point of view in Second life, I see very little difference between a venture capitalist or a stock exchange. If only to say the venture capitalist would want more of a say in your business and a much higher return.

No, no, no, no...if you really think "it's all the same", then I hope that you do not have any money invested in stocks or mutual funds.

I'll try again:

A bank promises you a specific return...the interest rate.

A bond promises you a specific return...the maturity value (which is sort of like an interest rate, but stated in reverse. You buy a $50 bond for, say $45, and it becomes worth $50 at maturity.)

A stock only promises you the CHANCE of a return. Haven't you read all those disclaimers? "Past results are no guarantee of future performance"?? As you said, the issuer of a stock doesn't EXPECT it to lose value...but it sure can.

Because of that risk, the possible rewards are higher with stocks than with bonds or bank accounts.