Second Life Investment Bank runs with money or taken by LL?

Yea, that's why I'm baffled. And as per Svar's post above, a bunch of people got their accounts turned off because they got some stolen money that a thief put into a sploder! That sucks, lol.

did they get their accounts turned off becuase taking the stolen money back put them at negative balance?

Or just receiving money?

If its the later - this is an issue so much bigger than these "banks" ever Content Seller in SL is at risk.

Well easy - firstly Id never heard of Ponzi schemes before Second Life. I did research on them after. So its very likely some people dont know what they are.

Also you are assuming a high level of organization. They might just be happy a lot of money is coming in and they are easily covering withdrawls so they may figure they are smooth sailing.

One simple question - How do they make the 20%? Wheres the money come from? Magic?

Uh, even I have heard of Ponzi Schemes before. The guys who run the bank I'm talking about are both graduate students in Econ and computer science. I'd imagine they knew at least that. lol. But yea, I guess you could be right as in SL any kid in his/her mom’s basement can set up a bank or fund. I guess you really need to research the bank first and find out who really is running your bank/fund.

Magic? No, on their website they say what they invest in, risks, etc. It all makes sense to me. Again though, their rates are a good deal lower than the norm in SL. I could even try doing it if I had the time and skills needed. But I don't so I won't.

But again LL takes back 150% even from those not involved!? LOL.

I bet you could make 20% loansharking

I was watching one bank in SL that is offering .002% daily interest. That is 73% interest annually. There is no investment anywhere that can guarantee that kind of return. I heard they opened in jan or feb of 07. According to their webpage, they now have 52 MILLION lindens on deposit as of today.

Are my calculations correct? That's over 192 thousand US dollars!!!

Jumping jillickers!

That's a whole lot of fraud!

Someone tell me how anyone can guarantee 73% annual return.

The most I've ever seen was like 6%

they might be lying about the amount invested in order to put people at ease investing with them.

"Wow if its that much - it must be Legit" kind of deranged logic.

Well, I watched it grow from 12 million back in march, and it has been steadily going up.

But you are right, how in the world could anyone know if those numbers are legit.

I dont know about 20% but as an example of how these banks work i will talk about midas bank which is curretnly in the IPO stage on the WSE. This is a bank i use and at 1 stage had over 50000 in my account. They pay a daily interest rate of 0.11% (about 3.33% per month) which is incredible compared to real life interest rates.

I myself realise that for the interest rate to be that good there has to be an incredible amount of risk involved. But i have read the IPO and the explanation of how their money is made makes sense. They provide a mortgage service and charge and interest rate of 7% a month (84% a year) which apparently many people are willing to pay. So after they pay all the interest they owe it leaves them with a healthy profit.

This may seem unrealistic when compared with the real world but youve got to remember this isnt the real world. I remember reading an article in my local newspaper that said the growth rate of the SL economy is over 100% which is amazing when you consider my country thinks they have it good when growth is at 3%. In fact i wouldnt be surprised if SL's economic growth rate was well over 100% considering its population growth (by which i mean the number of people actually using it not the 6 million number). Im sure someone else in the forum can provide more concrete numbers about the amount of growth $L spent each day, i know it has increased a lot in the 5 months ive been playing but havent coolected any evidence.

Yeah this would be that Loan Sharking I mentioned.

Lots of people default on these loans - Resulting in Huge profits becuase the forclosed on land is worth as much as the original loan or more.

And what is wrong with that? People need money, it is a very high risk venture, therefore a high interest rate. Have you ever used a CC? Or hear of those payday advances? They have extremely high rates.

It all sounds like a huge gamble to me, not just for the person throwing their lot in with the bank, but even for the bank themselves.

So you put your money in with this bank, and suddenly they close, and you've lost it all. Now what?

On the same hand what if someone takes a loan out with the bank, they pay the land fee's ect, and suddenly that person sells their land and leaves?? Or have I misunderstood how this works?

Second Life really is like first life in a lot of ways. It's scary. I don't like the idea of so much of FL coming into my SL >.> lol.

That not how it works when they give a land secured loan - THEY hold the land. In their name and add the person who took the loan out in a group on the land to let them do their build, etc.

If someone defualts on the payments - The Loan Shark then sells the land and keeps ALL of the money, not just what they were owed Plus the accrued interest.

The person who took the loan cant even sell their parcel thats in hoc to pay off their loan ..

That's why it pays to pay your bills.

Not true. If you ACT like a bank, but are not licensed as a bank or another type of financial institution that is allowed to act like a bank in certain ways (savings and loan, securities firm that offers checking accounts, etc.), you will be shut down.

The word "bank" is also restricted when connected to financial institutions. For example, back in the days when savings and loans were regulated separately from banks, an S&L couldn't use the word "bank" in its name, at least not without qualification. (I wonder if the "Left Bank Savings and Loan" would have been a permissible name?) The picture got more complicated after the S&L scandal and the takeover of S&L deposit insurance by the FDIC; the categories are no longer completely separate. Some states have a regulatory category of "savings bank"; they must use the two-word phrase in their name, not simply "bank". The nightclub can use the name because it isn't behaving in a way that anybody would confuse with a bank; it's not taking deposits, issuing checks, etc.

I remember saying something like this long ago when people proposed Banks in SL, Unsecured, and Run by person, or persons Unknown:

"There's a sucker born every minute."
Phinias T. Barnum.

"P.T.Barnum was conservative in his estimates."
Angelique LaFollette.

Angel.

Anyone who puts proper money into these things wants their bumps feeling.