Can we trust SL banks? PLEASE READ IT

Ending a Ponzi scheme early ultimately benefits more people than waiting.

I'm not talking about the Ponzi Schemes. They will fail anyway. I'm talking about the legit investment firms found in SL.

Even if that is true, the problem is that it wouldn't stop there.

Since the Lindens would not be able to ban every bank instantaneously, a bank would be able to run for some period of time before being banned.

This means that a scammer could come into the world, claim to be starting a new bank, and encourage newbies to invest money with them. The newbies may do this because they do not know that banking is banned (right now, many places and people try to warn newbies not to trust banks, but the message isn't getting through; why would the message that banking was banned get through any more efficiently? New users usually do not read the TOS/CS in detail)

So, for a few days, our scammer advertises the bank to vulnerable people all across the grid, and probably gets some investments. Then, after a few days when LL find out about the bank, they ban it. The scammer gets to keep the money and tells the investors he can't possibly pay them back because he or she's been banned.

They make hundreds of thousands of USD$ per month via the Lindex and currency creation. Check their economi stats to verify. (Volume * .035%) + (Currency created / 265) = hundreds of thousands per month.

They do not "create" all that currency

Most of the lindenX funds are L$ sold from one player to another

The only L$ thats created and directly sold is via supply linden.

They could only hold onto money that hadn't been converted to USD yet, so this may make little difference.

Mm, and scams can just as easily be disguised as other businesses. In RL most of these things pretend to be retail distribution, just a few paragraphs of hype away from the current clumsy BIAB scams.

I don't get the mentality of "Well they cant stop the Ponzi schemes fast enough, so they may as well let them run"

They have a ban on pyramid schemes. They should be banned for the same reason.

The problem isn't ponzi schemes per se, it's really the absence of accounting standards. Excepting the simplest self-contained schemes, LL simply won't have the information to distinguish a business that failed through incompetence or bad luck from one that was run with malicious intentions. The Arthur Andersen scandal from a few years ago reminds us that even audited books are suspect. A switch to payments in real currency won't do much either, not in the relatively small amounts that make up typical SL transactions. They will tend to fall under the radar, and still be messy to track down with so many different countries involved. And that messiness is why these things really need to be pursued by RL prosecutors.

Yes, thats where the RL currency helps

Since RL prosecutors would not at that point need to to muddle through what a L$ is.

The main advocates for moving from L$ to USD was for reasons of scaling and open source future.

Basically, the 3D internet wont be using the Linden$ its crazy to think it would.

We can exchange 'bank' in the thread title with any SL business which requires 'investment'. Whether it's banks, rentals, clubs etc.

There are simply no insurances in SL that you will get back the money you put in.

Asking LL to regulate banks, would beg the question, why banks and not rental lords? etc.
Or when banks and rental lords, how about investment funds, or how about that guy promising you to script your car? Or that dress you bought that didn't look anything like the picture on the box...

The only option you have, when investing in anything in SL, is, make a risk assessment, and go from there. This is a tough thing to do though, as:

1. People tend to take their RL assumptions about investing into SL. And in RL a lot of the common investments are insured or regulated. (And you PAY for those insurances)
2. There is no general knowledge about which investments can be trusted and which can't. Esp. as SL anonymity makes it basically impossible to see the validity/openness of any enterprise.
3. There is still a psychological effect where L$ aren't valued as high as 'real' money.

What SL needs is not LL trying to set up some kind of regulation, but a way where it's a lot easier to make the required risk assessment before investing in any SL enterprise/activity.
And people realizing you DO have to make a risk assessment.

Even investing in SL banks/ponzi schemes etc. could be a good investment, as long as you pull out before they go belly up... it's a risk assessment.

1. They aren't banks, so there ARE no "appropriate agencies for investigation".

2. LL is not "aiding and abetting". They've issued a cautionary post about SL "financial institutions". Simply providing the SL service, which some people use to conduct scams, is not "aiding and abetting."

2. It never ceases to amaze me how many people are eager to "get Linden Labs in trouble". Don't they realize that if LL gets shut down, we all go down with them? They remind me of the cartoon character sawing away energetically on the very tree limb on which he stands.

1. These aren't really banks to begin with - they are, at best, unregulated investment funds and the SEC would probably be the agency of interest.

2. Agreed.

3. I think the point is that LL only acts when under the threat of some kind of punishment. So bring on the threat, and LL will take action to ban these illegal activities. I don't think that LL would be held liable but the threat of liability, much in the same way that the gambling ban came about, should be enough to make them wake up and ban this thing once and for all. IMO, no one who operates an investment service in here should be doing it without proper licensure, since we are talking about a fiat currency that is quickly and easily redeemable for real dollars. People who buy into this "it's monopoly money" bs don't sing the same tune when their number comes up and they have either been hoodwinked by some shyster, or some other unfortunate event comes about that leaves them with hella less than they started and no way to recover.

this one id be interested in seeing.

The problem I've found with LL communication is that unless you are looking for it, or happen to not be in a hurry to log on the one day its on the log in screen, you don't see things.

They'd get through to more people with a Message of the day pop up AFTER the log in.

Yes, but Supply Linden created over US$500,000 in play money in November, and much more than that in previous months. Anyone who says the L$ doesn't have value needs to try that line on Zee Linden, see how it would change his bottom line!!

over USD 500 in L$!? OMG!!

Thats really not very much at all. I personally spent about 800 USD just on land costs and some other personal purchases. That would be money going from resident to resident, and I'm not even in the top 10% of spenders in SL. With how many people there are in SL, 500 USD of L$ is really not very much at all

In some parts of the world they put the commas and decimals the other way round.

That's US$500,000.00 or five hundred thousand dollars.

-Atashi

AHA! SIlly me

Sowwy.. so lesse.. 500,000 was made?

OK, new argument =P

How many L$ is paid to LL monthly for uploads, land sales, auctions, etcetra? I suppose that alot of that just kinda disappears and more is 'made'

In November, the Linden Sinks were the approximate equivalent of $468,000.00.

124,085,524 L in uploads, classifieds, etc.

Hi Oki,

We were talking about L$ sinks and all that stuff in this thread:

/142/f9/230581/1.html

I think starting now I'ma just stay outta this one before I seem even 'stupider'

Yes, I made a typo, the number is over five hundred thousand US$

Look at the Economic Statistics on the blog:
http://blog.secondlife.com/2007/12/18/economic-key-metrics-for-october-and-november-2007/

Linden Sinks are items that take L$ out of circulation; fees for uploads, group creation, partner/divorce, L$ auction land sales, etc. In Nov. LL sold 140 million L$ and took out 124 million L$. The object of LL is to keep the L$ somewhere around 265 to the US$. They act more like the US Federal Reserve, controlling money supply, as opposed to a bank that directly pays interest or gives out loans.

I didn't say the Linden$ doesn't have a value.

Its LL who likes to play both sides of the value fence.

My point was that they don't create all the money sold on the LindenX, It is NOT printed as people buy it, it is sold from one resident to another in the vast majority of cases.

Considering LindenX activity is around $200,000 US dollars a DAY -

Even $500,000 USD is only a small portion of the total. Around 8%.

They could easily cover this as a "revenue source" by increasing the transaction fees slightly, if it was a money thing.

Originally they were not supposed to be printing money to sell directly, the Supply Linden is there to help along the Linden Exchange rate.

I pretty much agree with this. I just wanted to poke back at all the people who seem to think LL ought to be "punished" for this or that.

But I really, really hate the thought of a government agancy messing about with our virtual world. Do you really think they would do any better than LL? Rather than bring government attention into the picture, a better source of pressure might be a citizen, or group of citizens, who have been damaged by one or more of these "institutions". They should bring suit against the person who ran the "bank", but LL should be a named party in the suit. It might be possible to prove contributory negligence on LL's part.

And I agree...an SL "bank" should be licensed and overseen by LL. At the very least, the bank should post a surety bond in the amount of their depositors' investments.

If LL is unwilling to regulate SL "banks", then they should prohibit them. Make avatars' LL accounts the only "bank" in SL.

I don't want government regulation either -

but if rampant fraud isn't addressed, it will happen once enough people, or enough people who matter lose money.

If they merely banned the use of "BANK" for businesses like they did Lolita or Casino- they would reduce some of the problem.

Many assume "Bank" means a low risk investment. Those schemes using the name Bank know that and are taking advantage of that fact.

Supply Linden is there to skim as much as possible from the economy without destroying it. Supply Linden isn't there to help it.