Post Ban: Status of banks and other financial firms in SL (Regarding Solvency)

Bugger off troll.


And I'm just adding you to my ignore list


Indeed but I think most people will agree that this isn't real life even if it isn't a game (and it isn't at least not anymore) it isn't real life.


Ok, regulation and saying that they can't exist because no authority will regulate them are two different things.


If you actually read my previous posts you'd see the difference between the two as I reiterated above, and I don't plan on repeating myself again if I can help it.


This isn't real life, if you want to debate real life banking laws it isn't the time or the place outside a limited scope on how they're applying to SL right now.

Enjoy my ignore list, it's a who's who of trolls and spammers since my first visit on the forums so it's quite crowded but I had them move over to make more room for you.

I won't insult your intelligence by quoting statistics but I think you know as well as I do the effect guns have had, I don't know what country you live in but in the U.S. at least the murder rate is through the roof and yet guns are still legal per the constitution.


I didn't mean that they were equal, of course regulation reduces the amount of bank fraud however I was counterpointing people who say that there is no fraud in the U.S. banking system which isn't true either, there is and always will be because "that's where the money is".



I don't mean to take your quote out of original context but that's a long paragraph to entirely quote.

From everything that I've been able to find out it seems that the turning point was A) an article in an MIT publication and B) the fact that LL got subpoenaed in regards to a lawsuit about the money lost in the Midas collapse this along with every other policy decision by LL with the possible exception of the gambling ban (which was precipitated by a possible cutoff from paypal and the cc companies) are based solely on bad publicity which makes LL a pretty sorry excuse for a company in my opinion.



That's what SKY investments did, they bill themselves as an investment fund but while they diversified to a certain extent they put much of their money into a single institution and are paying for it now.





Well yes and no, they're required to go through the motions but from what I have seen they are almost criminally slow processing DMCA requests and in terms of pornography in the U.S. at least it's exceedingly hard to be prosecuted for distributing pornography as long as the participants and/or subjects are over 18 and acting consensually even it's with the appearance of it being non consensual.

I wasn't aware that they were slow responding to DMCAs I was only aware the process is annoying for something like SL content.

But they are required to respond to properly filed ones just like any Webhost. And they acknowledge that.

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Well the reason its hard to prosecute Pornography is because the first ammendement protects pornography - thats what the whole Larry Flint thing was about.

Everyone in SL agrees that they are over 18+ to use the service. Which is all that is currently required.

SL isn't required to do more than any other Web-Host about pornography.

Just to play devil's advocate here, Gordon, they will permit SL banks to continue provided they have documentation of RL regulation on file. *What* documentation exactly, is a little murky.

Don't let the flame-mongers get you down, man. That's what they feed on. It really gets their goat to rise above and report the successful payouts and banks that are taking steps to obtain the correct documentation. These trolls are afraid of a little truth.

I think you'll see SL banks continue to do business after the 22nd, even if it is in a different incarnation. For example, JTFinancial is implementing a system to use lindens to pay for items found elsewhere on the web. Won't that be a coup? They pay their obligations, successfully move into other areas of legitimate business in and out of SL, and thumb their noses at the people who are now on our ignore lists. I find it delicious.

What difference does it make to the banking ban if the former banks go into other sorts of business?

As long as the business isn't banned that is what they should do.

If you don't know the whole story please check out the threads in the general section of the slcapex forums that have some great ideas on the subject as well as some of the company specific threads specifically LNL.

One major issue that has been brought up by several people including Bo Beck, Lindsay Druart, and Arbitrage Wise to name a few is that the requirement to get a banking license for a bank in SL is impossible for several reasons as far as I can tell and have been told. First of all you have to pay quite a lot of money, secondly it's state regulated however the feds have some say as well and even if you could get Utah (famous for lax banking regulations) to approve you could never get the feds to sign off on it.

Once you have a license it opens up a whole new can of worms, the Patriot act and another law (I'm drawing a blank on the exact name at the moment) require that banks collect certain details of their depositors including real life name, social security # and a bunch of other details which people in second life wouldn't give and it is actually against the terms of service to ask for. There is also the very strong argument that has been brought up that doing business in SL even if you could follow those laws would not meet legal scrutiny for a variety of other reasons and would result in an almost immediate revocation of a banking license.

In short LL has created a situation that not even a real life bank can get around since you either break the law and the quasi official TOS (the blog) or you obey the law and break the TOS (by collecting data) while still probably breaking the law. Even a real life bank would have problems getting around this so LL has created an unwinnable situation.

Disclaimer: I am not a lawer, I am not quoting just paraphrasing generally from threads on Slcapex and a few other places as well as company announcements, if I'm wrong you can sue me but I don't have any money so it won't do any good.

However the proportion of people killed by guns is nowhere near the proportion of Banks in SL that were Ponzi Schemes.

The Second amendment would be struck down if we reached a murder rate that made it a true liability.

As it is you are far more likely to die in a car crash than be shot to death. Car safety is heavily regulated.

Gun ownership is also regulated.

The scale of a problem depends on proportion.

One failed savings in loan out of thousands is pretty small proportionally to say 1/2 of SL banks being Ponzis. Or even 1/10th.

To all pro-bank lovers:

If you read the blog properly you will notice that banks have not actually been banned.

You are more than welcome to run a bank but you must now comply with real life regulations.

Also heres a list of failed banks:

Ginko
Midas
Tao Banking Group
Allenvest
The Bank
8 Dragons (Although I think depositors may have got their money back from this one)

6 failed banks in the space of 6 months!!!

Exactly how many banks are there if 6 have managed to fail?

I wonder how long they really thought unregulated banks were going to be allowed after Ginko evaporated somewhere between 1/4 and 1/2 of a million dollars.

Its LL call I would bet they dont want to be sued and I dont blame them. Its not really the same a faulty good is still a project. This is a case of handing someone your money/lindens with some sort of promise he might pay you back one day .. maybe and calling him a bank. If you buy a bad quality AV its still an AV ... The only license i have to run my busines where I am is the one to pay taxes. Not all business require licensing.. just register and pay your taxes and be good. Thats how the bulk of businesses are in SL exept banks those are usualy regualted by federal laws and are required to be chartered and run by certain types of people. Its not the same as opening a dress shop and selling dresses.

The requirements where i come from to operate a business unless its something thats regulated like say a blood lab.. are very simple and easily done by telephone. You pick up the phone and get a registration number in order to pay the government its cut and thats about it. Regulation is mostly self regulation and not nearly the same as running a bank. I'm in Canada and I dont know where you are but really as long as you pay your taxes and dont flog your employees or something you are fine and the only complaints you deal with is if the doodad you made broke prematurely...

Banks.. well that's a whole other ballgame and so are lending institutions of any kind these are not run of the mill businesses but heavily regulated ones whole other ballgame and like casinos it was inevitable they would have to go as a result of it.

Read my post above, that is an excuse by LL which everyone seems to be buying, unless I and quite a few people who are much better at things like this than me are very very wrong there is no way any RL or SL bank can operate in SL without falling afoul of any number of laws and/or no way for them to even get registered if they are an SL bank using the available methods for registering a bank.

I find that an interesting observation:

It sounds like any RL bank operating in SL would have to do the actual account sign-up via a third party site.

Of course it would be hard for a SL bank to get RL credentials.. thats what regulation is.

It may be impossible for either to actually exist as you say.

I do think eventually to see Credit Card advertising in SL with a third party sign up tho. Since this is already on the 2D internet and on TV regularly.

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On the "excuse" note - LL doesn't actually need any excuse to pull the plug on banking. They can just ban it. Its their world. So whether we buy it or not is a bit immaterial.

I was actually psyched about First Meta and was going to sign up with them until I noticed that they have a monthly charge unless you purchase over a certain amount with it. That was the showstopper for me, if they ever get rid of the minimum charge then it's a great idea.

Smartass

Ok, firstoff

How do we get a license, simple:

it's totaly uncomplicated to start an international bank, all you need is the US Federal License (wich is about 10Mill USD), with that you can offer services to US residents only, thats quiet small market, if you wanna actualy get some customers you'd additionaly need a EU based regulation (wich is about another 10mill USD), and optimaly also get a Japanese regulation (wich is another 10mill USD)... or ok, let's be cheap, let's drop the us since majority of SL'ers are EU+Japan (should be enough) so thats just 20million USD or in Lindens, no more than 5,5 Billion L$ wich is prety much the total L$ supply)... Some companies will need additional adjustments to their businesses due to The Federal Reserve Act of 1913 nobody is allowed to print their own currencys (call it fictional currency like WSE wishes to call it, or such as in Linden Labs case limited license right... such fine words but in practice they have all the requirements to fit into the category of Money, so i'm waitng for an anouncment from both of these comapnies to comply with the regulation/license requirements in their respective countries or we're gonna see some interresting legal issues).

And then the banks you listed, first:

8 Dragons,
in this case you seem to have wanted to type so fast that you forgot to read, as you could see in their anouncments that banks was performing liqiudation already before the ban, so all shareholders will get back their cash and so will depositors. This bank never failed their customers nor their owners (shareholders).

Tao Banking Group,
To my knownledge they never even started a bank, but i may be wrong, stil the whole concept that tao group started just vanished from the pages of time. the founder literally ran away from it.

The Bank,
This one is a very ugly one, the landbaron bought the bank from previous owners, sold all the assets and disappeared.

Allenvest,
Thanks to JTF, there is a recovery program there, one good example on how you can apply the principle of "community pressure" and primitive form of self-regulation to benefit the community.

Ginko,
We all know that story by now,

Midas,

in my personal opinion the uglyest of them above all, prety much because midas suppported WSE all the way since start in JAN 07, he helped WSE, and when he asked WSE for help when he ran into liquidity issues WSE turned their back, they for no other reason that strategical aim to bancrupt midas calcelled the planned dividend something that would have just been enough to keep midas running... Such greed is legally not criminal, but it's so disgusting it should be criminal.

Personaly i'd rather see community pressure methods to squeze the unserious players out of biz, regulation sure sounds great but it has it's price, and the customers always pay it, for example lets look at a typical Savings Account in RL, what do they pay about 6-10% annualy ? Let's say 10%, lets take into account inflation (i'm not speaking of inflation excluding Energy and Food wich is a very improper way to measure inflation), when you include into USD iflation Energy And Food the figure you come up with is something like 30% just the last year and i'm rounding down ALOT here it's more than that, so this Savings account at 10% actualy costs you 20% You are paying the bank 20% for storing your money, thats good biz, for the bank, not for you. (keep in mind that is in a savings account at 10% annual return, if you just store it in a normal account you make the bank even happyer).

Thats why i use sl, i'm sort of tired of all the crap in RL, i'm one of those that believe in a free world seperated from RL where the community pressures itself... But since we're moving more and more away from it, and people want RL into SL, the lets stop playing games, lets get serious about RL laws, those laws clearly states only Federal Reserve can create money and nobody else, so Let's get Rid of the unlawful L$ and WIC's! (not that this will serve anybody, but since the majority of SL'ers seem to be so obsessed with THE LAW, lets BRING IT!)

Theres a difference between deciding what laws to enforce in SL and the laws LL's lawyers tell them they need to be concerned with.

You should read my post carefully, and then also read lindens blog, and then you'll figure out it had little to do with laws in itself, it had to do with alot of people who don't like reading the TOS of userbuilt content, for example Ginko clearly stated that your "investment" isnt guaranteed, still they wanted a compensation, instead of acting like adults contacting an rl lawyer and doing something with it by going after ginko owners they claim the service provider have responsibility (something also stated in TOS they dont) they blamed nanny Linden, nanny linden got so many of those ungrown adults that they had to please the majority. The solution they came up with only brings legal questions into picture + it created alot of dissatisfied customers (those that had bankdeposits)... i didn't because i prefer to invest my money myself to get my 0.10% daily average... but whatever..

I guess i shouldn't expect civilized behaviour from grown up adults.

Your post is merely opinion - like anyone else's - you don't cite sources that would state their stance had nothing to do with their legal advice.

Their blog post however DOES say they consulted with their Lawyers. The fact that it doesn't contain the details of those consultations does not mean that those Lawyers did not have opinions on the matter.

In fact with lawyers its often the case that you wouldn't reveal the entire opinion of the lawyer in a subsequent announcement. But rather just mentioned they were consulted. The Gambling ban was similar.

My point is that there is a difference between LL deciding to bring RL laws into things and their Lawyers deciding that RL laws might already have an impact on things.


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As an aside -
In earlier threads posters were able to test and determine that the Ginko disclaimer was not provided to all depositors prior to making a deposit. So that is a poor example.

They are responsible for it, no matter how they or anyone spins it. They own it for real. Any other "ownership," other then intellectual propeerty, created by others, is owned by LL They owned Ginko and the others, They let it happen. They looked the other way. They are the only force in SL able to police illegal activity in SL and they choose to let it go on---in a virtual world they own. Laws may be vague now, but they wont be vague later. Scamming is scamming and it is not rocket science to tell what is scamming and who is to blame.

With nodisrespect to your opinion, there is something that sounds prety crystal clear to me:


Linden Lab TOS:

1.2 Linden Lab is a service provider, which means, among other things, that Linden Lab does not control various aspects of the Service.

and it continues to saying: "...Linden Lab generally does not regulate the content of communications between users or users' interactions with the Service. As a result, Linden Lab has very limited control, if any, over the quality, safety, morality, legality, truthfulness or accuracy of various aspects of the Service."

If anyone can tell me how this could be misunderstood in the way the 2 previous posts stated, i'd be pleased.

And no Rebecca, they don't own it, they allow YOU to create content, and so it's your responsibility to not perform criminal actions or some other user will go on with an RL lawsuit such as we saw with SexGen case, sexgen creator didnt run to nanny LL crying he did it as it should be done by a grown up adult, unlike the kids that lost money because they invested into suspicious banks.

Imean no disrespect to those that lost money, i was just using the term "kids" to make a point. People simply misunderstand the role of a service provider and twist it with content provider.

To put in a different example, lets say that godaddy.com sells a coumple of servers to a company that wants to run some form of online store, but after a few months it turns out that customers that paid never got the products they paid for, can we hold godaddy responsible ? I would say no, i would say though, we can expect godaddy to give out all personal info about that company to lawyers to make the case, but in no way should godaddy be held accountable for content they dont create, but surely they provide the platform to create content, even criminal content, but we just cannot be foolish to expect godaddy to be accountable that just doesnt make sense.

Back to LL and it's action,

the only thing that makes sense here is that they were afraid of negative publicity, thats it.
Thats my opinion.

It's similar in some way, but differnet in many, infact you are still allowed to run a bank with an rl license, but you are not allowed to run a casino with an RL license. Yet in the UK where the new LL HQ is based Regulated Online Gambling is perfectly legal.

My opinion about that is to be honest WTF (and i dont mean the "fictional" fund from the ficional stock ficional exchange, ficionaly operated by the fictional rl company hopecapital ltd, by a ficional person called luke "i-am-ficion" connell .

The US law that LL is abiding by makes no such exception for RL legal gambling online.

While they could do like you say and allow it, they would be forfeiting the ability to take payments from US CC companies.

That was the issue about gambling that led to the ban in the first place.

Here’s at least one success story. Read it at:

http://www.virtuallyblind.com

Sorry that this is an aside but I feel the need to say it.

Using of the phrase "it's not rocket science" is such a silly thing to do. For one thing, rocket science is quite simple, whereas what is often referred to as 'not rocket science' is usually much more complex, as in this case.

What "it's not rocket science" means is that you are unintelligent enough not to understand what is obvious to me - and that's insulting. However, the person saying it offers no knowledge of the topic, which is a complex legal issue. All that is offered is ... well, nothing >>>
Actually something *is* offered, and it is - I have an opinion as to who is to blame, therefore you are unintelligent if you can't see it (my paraphrase).

Sorry, I felt the need to write that.

Basic Rocket Theory is simple.

Rocket Science isn't simple.

Engineering rockets is tough. It was a huge effort of the entire after World War 2 period. There were some very brilliant people involved in producing reliable rockets.

Those early Rocket Scientists were actually hunted by the Soviets and the Americans at the end of the war trying to secure them for their side.

It is this Era and this massive effort that led to the term.

Alright. It's the theory that's simple. But the use of the phrase in posts is usually an insult, and often the person really knows very little other than their own opinions. I.e. It doesn't require a lot of intelligence, so if you don't agree with my opinion, you don't even have average intelligence.

And it's often used when the person has little or no persuasive arguments - a sort of last resort. Very unimpressive.