Ginko Has Not Allowed Withdraws For Over A Day Now...

I'd say where at the point where we will see if they are really a ponzi or not. Although i agree if your willing to take the risk there is nothing wrong with that however i would feel very foolish if i was depositing money into ginko now considering you can only take 5000 out each day.
If i had any money with them id be wanting to get it back as soon as possible and id say a lot of other people are thinking that right now.

You have to wonder where he's going to get close to 200 million lindens from in order to pay everyone back.

I have explored the banks in SL and although ginko is one of the biggest id have to say it is also one of the most risky considering their lack of transparency. Also i have read interviews with the owner and he is not even sure himself if they are making profit.
There was one bank in SL that had very good transparency but i cant remember their name, they have detailed weekly accounts (made public each week) of their dealings and most of the profit comes from land trading and mortgages. If i were to put any money in SL banks id much rather use this one than ginko, at least you can see what is being done with the money and whether it is being used profitably or not.

Not sure about the vast economy change but you're right about Ginko. If its users panic and attempt to withdraw all their money it will collapse. Anyone that knows anything about the cause of the US Great Depression could predict that. That's also the reason why RL banks are FDIC insured. It's a "security blanket" to prevent a recurrence of that sort of mass panic.

Nicholas has published a breakdown of some Second Life investments Ginko has made, I will not repeat them on this thread because it names SL people. However on the Ginko web site thread I posted this comment of which I will repeat here.

I think the time has come Nicholas for you to be more open about your off world investments.....

You may be aware of my own background in the real world and I am sure you can understand my continuing interest in Ginko. On the issue of your (hidden) real world investments I have given this a great deal of thought as to what "real asset" could possibly return a rate of growth that would be consistent with the average interest rate you credit Ginko depositors.

Excluding "day trading" and so called "penny shares" of real life bourses (a strategy you denied in a previous post) there may be two other possible routes.

The first is the extremely careful selection of quality shares on major markets, I accept some businesses quoted in London and New York have shown strong growth since the commencement of the bull market in 2003. I do not give financial advice in VR BUT to absolutely prove beyond all possible doubt such a strategy COULD work I will offer ONE example. Take a look at Dignity PLC (epic code dty) on the London Stock Market. Over two years excluding dividends the share price has grown by around 80%, and over 3 years 147%. Dignity is a very old fashioned business, not high tech, potentially sound imho, in fact it deals in Death because it is a quoted funeral business.......nothing racy there. Its even recession proof because we still all die. There are hundreds if not thousands of similar solid businesses you could have invested in. Do your own research.

Another potential target for Ginko investment is pornography. Providing it is legal, I could imagine certain web sites could generate the sort of return to pay Ginko depositors. Sex sells.

I think the way to end this current bank run is for you to publish a quarterly or half yearly balance sheet, which would include assets and liabilities.

What's the URL; i can't find it.

For all the "piling on" here, Ginko's has generated a handsome return consistently and for quite a long while, as SL timeframes go. Whatever it is, it's not a "take the money and run" scheme, as I rather suspect of "banks" with shorter track records.

And the thing is, if a bank actually made in-world L$ investments with deposited assets, it would be a valuable part of the SL economy--*if* there were some way to regulate it enough that deposits could be "insured" by the "central bank" of Supply Linden. But given that there's really no way for an in-world external auditor to see transactions, only Lindens could do it, so we can safely assume it won't get done--if for no other reason, because it would hurt LL's revenue for there to be a safe place to keep L$s, instead of paying the cash-out fee on the LindeX.

I feel that generally things that seem too good to be true ARE too good to be true. In the case of the Ginko bank, I have no knowledge of their business methods and means of delivering the high rates of return that they are giving people, and so that is enough for me to decide that I won't place money with them. It isn't that I fear to lose it, but that I fear to affect other people in ways I can't know, by investing in something which is so unclear. I don't want to be funding people trafficking or helping criminal gangs to launder the profits of drugs etc.

The possible solutions for their high returns that have been suggested over the last few months include the possibility that new investors are the ones funding the interest for old investors, which is type of pyramid scheme, and that they are obtaining funds from obscure sources which may include pornography and other dodgy investments.

It's all very well advising people only to invest that which they can afford to lose... the trouble is that a large number of people investing their pin money leads other people to take risks with money they can't afford to lose. The people who have the most to gain from a high level of interest are likely to be the ones least able to carry the loss of their capital.

There is also the concern that if shady deals are involved (or maybe SL gambling?) that what I do with my $5000 lindens might adversely affect others.

That having been said, the best regulated bank in the world will collapse if there is a consistent run on the bank, with everyone trying to withdraw their money at once. The problem is overcome with insurance, maybe, but I don't think there are many financial institutions which could recover from a bona fide run.
Cali

I agree with 95% of your comments.

That is why I think the time has come for Ginko to publish regular balance sheets detailing assets, liabilities, and income.

Ginko depositors (I personally hold no material funds within Ginko at this time) could then make a judgement as to viability. That includes ethical investment strategies, of which I appreciate are mirrored in first life investment portfolios.

One small point, in first life a central government would usually insure the assets of major banks, thus making them more resistant to bank runs. Here, I do not really see how Linden Labs could insure Ginko, but in the light of certain comments by Gov Linden I am prepared to live and learn

It now would seem Ginko has come up with a financial scheme to restore stability.

A review this morning seems to indicate Ginko are offering term deposit accounts with so called guaranteed rates of interest from 3 months to one year. You cannot access your term deposit within that period of lock in initially selected.

Rates are 0.2% per day, which is about twice the standard rate of currently 0.1%.

You can choose to have that compounded daily, or paid into your standard Ginko account.

At the top rate of 0.2% per day compound over 360 days that would (I think) double your money.

One of my personal standard investment rules comes into play here "If it looks too good to be true it possibly is"...but I have to confess I wish I had a Time Machine -

Who in their right mind would lock their money into a savings account for a fixed period of time with a 'bank' that is uninsured and unregulated? It could disappear at any point of time within your lock-in and there would be absolutely nothing you could do... no recourse whatsoever. Given the recent course of events, offering term-locked savings accounts look like a blatant case of 'robbing Peter to pay Paul'. Until properly regulated banking sets up shop in SL, the 'Under-the-matress bank' will always be the safest option.

Seeing how we've seen the influx of RL corporate businesses flood into SL, I presume it will only be a matter of time before either an RL bank sets up shop in SL or an existing bank in SL becomes accredited, insured and regulated as an RL bank and thus safe to do business with. Laughable as it may seem, this is something I would like to see happen as it will be a genuine milestone along the road towards the real metaverse.

I think any bank in their position is going to struggle to convince people that long term investment is an answer. Maybe when this all blows over they'll be able to get back on their feet.

I'm in the "It's too risky" camp on SL investment schemes but I'm sure there are plenty who have benefitted for Ginko.

This is well said.

One possibility - the casino owners and those here mainly to gamble might be cashing out and going "home".

One dear friend of mine was an avid black jack player on those rare occasions she was online. She cashed out all her Ginko Lindens as soon as she heard about the ban and sold them for USD.

And quit SL entirely .

Well folks in part it looks like one version of the Time Machine just may have arrived if these web links are correct. I think it is important that these threads are read by all potential Ginko investors. Just a personal view.

http://virtuallyblind.com/2007/07/31/ginko-buying-avix/

http://virtuallyblind.com/2007/07/30/interview-with-ginkos-nicholas-portercarrero/

Wow. Thanks for posting that John. Nobody Fugazi and Benjamin Noble asked excellent questions. I hope people read that. Sadly, I think some people are gonna get stung.

Stick a fork in Ginko, its done. I wonder if any airlines offer angry mob discounts to San Paulo?

Very informative interview you found there, John.

I wish everyone involved the best of luck.

Hope that as many people as possible get their money back .

Looks like they wont.


If these reports are true - the scheme was so hare-brained it was worse than gambling.

While I have never had any problems at all with Ginko (and briefly worked for them as a "corporate mascot" of sorts), I AM giddy with relief that I took most of my money out and cashed it back into USD's right before this happened. Completely unrelated to any feelings about Ginko, just peeved at the Lindens policy on gambling, and figured that voting with my dollars was the best way to handle the situation.

So I DO have to wonder if there is a suddenly and massive surge of withdrawls due to former casino owners cashing out...after all, why stay? When the SL "Government" starts banning one thing en mass, who knows when it will actually stop?

And not a moment too soon, I might say! Granted, I only had about $76 USD in Lindens, but I'm glad I was lucky enough to cash out before the bottom fell out.

And sweetie, I wouldn't say I've quit entirely. Just mostly. I'll still be online now and again to see how this place is doing. It's sad to see whats become of it after almost four years of being on.

*reads halfway* Okay, I don't know much about banking procedures, but the word 'potential' makes me shudder with it's overuse, especially when combined with all the dancing around and lack of substantiated numbers. This is coming from a financial 'noOb' no less... so it sounds really, really bad.

awww - good.

you should come up and see me some time .

When all this went down about the casino's and machines being shut down and first wind that Ginko was "limiting" how much of my Linden's I had put in their system.. I withdrew every cent I had in there. I'd rather loose the interest it would make than loose what I had. Granted, it's not as much as some..but all the same, I worked for that Linden & not for it to be lost by this situation. I for one am fortunate and glad I safely have all my Linden with me at this time.

Well I deposited the proceeds of a land sale in Ginko last year in June, around $500, and having said that I was aware of them for some time before, going back to 2005.

However the more I looked into it (Ginko) the more uncertain I became. To loose $500 would honestly not cause me a moments worry, but to be part and parcel of something not correct would, although I also took a view it MIGHT be possible for a skilled private stock market investor to generate Ginko's returns because to be quite honest I do know a few people in real life who can, consistently.

Also not being a computer programmer it was just possible he (Ginko) had some edge that I may have been unaware of, however two in world avatars convinced me otherwise albeit at separate intervals of time. For which I thanks them (male and female) You both know who you are.

So I cashed out last November

But if the web links are to be believed it now appears a young kid in Brazil, who always wanted to be a banker, just like other kids wanting to be a train driver or astronaut, decided that Second Life enabled that process, hence Ginko.

Who knows what may happen now

The reason Ginko is collapsing is because it is--and always has been--a ponzi scheme. Looking at their promised rates of interest on an annualized basis, those rates (depending on what Ginko was offering at any given time) worked out to between a 30 to 70% annual return. Can you think of any legitimate investment that offers such a rate of return?

What evidence do you have other than the L$ listed in on your Ginko account statement that Ginko is making those rates of return? Sure some people have taken all their money out and gotten that interest--but that's how a ponzi scheme works. Up until the last minute, everyone is paid with a smile.

So instead of offering their standard annualized interest rate of 44%, if you trust their "Certificates of Deposit", you can make 107% a year. Oh yeah--I'd be REAL reassured.