Bank Ban Needs To Be Amended To Include All Financial Operations.

Ok I waited a few months since the bank ban to see what would happen. We all know LL banned banking back in Jan of 2008, but their ban was so open ended that all the bankers and other operations which lost people hundreds of thousands of real world USD are opening up other operations and doing the exact same thing all over again!

Just this month two “investment funds” shut down operation and ran with invested funds. One stock exchange has left world almost completely and has held, against the wishes of their investors, invested funds for over SIX MONTHS now! Other stock exchanges keep changing the rules and have run off with what some people are estimating to be, $300,000USD, while telling their investors, “sorry, the rules changed, here are some junk bonds!!” Other “funds” are popping up each day and are doing the same things the banks did, but they call themselves “funds” instead of “banks” and when you deposit L$ into their “ATMs” you get “shares” instead of a “balance”, which you can withdraw again later if you are lucky, and then they pay you "dividends" instead of "interest". It is the same thing as the old banks, only with different wording.

The original bank ban goes: “it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter.” But people are trying to get around this policy via re-wording their notecards and/or changing a few lines of ATM code. They continue to offer close to ZERO transparency, just like the old banks, and few if any, disclose their real world identities. “I have a super investment model which I won’t disclose, but trust me!” Sound familiar?

Lastly, all of these funds, stock exchanges, etc are all ILLEGAL under US SEC.

To avoid further scams and unreliable funds from losing everyone’s money and to protect newcomers to SL and SL itself, LL needs to amend the banking ban to something like: “All financial operations, which would normally be regulated in the real world, are now banned from operating in SL without proof of an applicable government registration statement or financial institution charter.” This stuff is regulated in the real world for a reason.

My question is: When will this be done? Everyday I meet more people who have been scammed by these “investment funds” and “stock exchanges” and this is all months AFTER the bank ban was introduced.

Thanks.

Frankly, after all the bad press these things have received, I can't comprehend why anyone would continue to fall for it. But then again, people do a lot of foolish things, even when they know better.

I understand your frustration, but the only people who can really do anything about it is the Lindens, and if they don't feel inclined to, that is that. The best you, I, or anyone can do is to continue to educate people at every opportunity as to why it's a bad idea. But everyone has the free will to walk off that cliff, or not. Ultimately everyone is responsible for their own actions.

Unfortunately not everyone reads the press, nor do they realise that if someone is running a scam in SL that LL won't do a damned thing about it. Many people sign up and assume that the company (Linden Lab) giving these scammers their tools and their market will take action against them when the scam is revealed.

LL needs a much broader terms of service when it comes to scams that lets them interpret things themselves. After centuries of law-making I don't think any country has yet constructed an article of law that full defines scams and properly declares them illegal. They might as well get a few people who can spot these things and let them decide if an abuse-report represents a scam that needs to be crushed or not.

Yes, I agree. But even reading anything about most of these operations, it's pretty clear they aren't sanctioned, FDIC insured, or even plausible. I thought it was good when LL banned the banks, but if they can simple get around it by changing the words they use, but not the spirit of what they do, then it was a hollow gesture.

Hello, my name is Overdue Cumquat and recently my dog was fired from the security exchange of a small government in Buttend South Africa. Due to some complicated BS that sounds good to only a complete idiot, I need you do send me L$5000, to help secure a L$5000000 account. I will, as a token of my appreciation, give you some undisclosed and entirely imaginary percentage of the imaginary amount I receive, once I manage to secure the imaginary monies in my imaginary account. Thank you!

People fall for this idiot BS all the time in **real life**, why the frack do you think they are going to be any smarter because they can figure out how to install SL? The real question is, why the hell do companies insist on presuming that their users are **not** this stupid by default, and do something about it proactively, instead of after the fact?

Are you new here? The announcment of rules and the enforcement of rules in SL are mostly uncorrelated.

Hell, they don't even enforce the "don't post the same message to different forums" rule /327/0d/258501/1.html#post1986512

Include All Financial Operations would also mean general trading from vendors shops etc. Be careful for what you ask for. Better still, remove money all together?? Stop whining

What most fail to realize is that the funds that were operating before the banking ban that are failing now are failing BECAUSE of the banking ban. Many people that ran these institutions tried to run on the ashes after the fire and that has become extremely hard so yes the rules have changed. As for the new funds popping up, I am not so sure. The stock exchange that closed actually closed before the banking ban so that comment is pretty null and void really.

All in all the banking ban changed the way business is done but in most cases, any losses were due to the aftermath and not the birth of a scam. I am with Cash on this one. Be careful what you wish for........

P.S. Until the SEC recognized the Linden as a currency and the shares in the companies as unregistered securities, that part of the comment is a bit null and void as well.

No, I am talking about "funds" which have popped up and went into operation AFTER the banking ban. Some are run by the same people who ran the banks. They opened new operations which are identical to their old operation, only the wording on their note cards and the way the ATMs operate allow them to try and skirt the new ban. Some of them still owe their old "bank" customers money, yet they are opening new funds. The specific funds I was talking about in the original post are funds which opened AFTER the banking ban, operated for a couple of months and shut down operation and ran with invested funds, just like many of the bank scams did back before the ban. The problem is that the bank ban was too open ended and is allowing people to do the same thing the bankers did, but by calling themselves "FUNDS" instead of "banks" and paying "dividends" instead of "interest" and allowing you to hold fund "shares" instead of a bank "balance." They give little to no information on how the fund works or who they are in real life. "I have a super investment model, but I can't tell you what it is, just trust me." Just like many of the old banks who ran with deposits before the ban.

These “funds” as well as many of the stock exchanges are running off with people’s money as are the “CEOs” of the traded companies in question. Sure, not ALL of them are evil or trying to run with funds, but a good number are and have and there is simply no way to tell who may as there is no oversight. And again, all of this is illegal under US SEC as something of “value” is being used as a medium of exchange. Call them and ask.

Lastly, why are we getting so many posts to this thread by first time posters? You guys are not alts of the bankers and "fund managers" in question by any chance?

Now, that's an observation you can take to the bank. (ouch XD )

Actually they are " fund managers" and not alts. And yes I may be a first time poster in this forum because it served no use till now. Have been in SL since March 07.

Not quite first time, you have 8 other posts under your belt.

I don't manage a fund but I did manage a bank that is currently going through a closing process after 1 year of operation. I am no where near and alt and I don't hide behind my avatar.

SL is becoming...well for me....a socialist government in which everyone wants the government to save them from themselves. I understand there are scam artists out there and some people are simply uninformed but when will the time come that people take responsibility for their own actions? I mean, some guy in SL is offering you a 200% return on investment in 3 months and you just jump on the band wagon? I'm sorry but some stuff it just too good to be true and it usually is but when that person gets burned, they want LL to ban this and ban that.

Whats going to be banned next? I bought some hair and tried to stretch it and screwed it up! LL, ban prim hair!!! Or...I rezzed my house on the edge of the sim and didn't bother reading that long notecard that came with it and the house is no copy and the prims got returned to my inventory in pieces! Ban rezzers! Make all items copy!

I mean come on! Some personal responsibility is needed. Some personal education is needed. You can't get stopped by a cop and claim ignorance that you didn't see the sign. The cop will issue you your ticket and see you in court.

If LL had come to the sector, the actual honest people, we could have been allowed to self regulate and be the whistle blowers for the sector on these bad deals but LL is the type of company that would rather turn their head and fold their arms ignoring the residents than to diplomatically deal with anything so.....what's next for the socialist types to whine about and get banned from SL? Sex?

"Lastly, why are we getting so many posts to this thread by first time posters? You guys are not alts of the bankers and "fund managers" in question by any chance?"

Pan Fan. Who is telling me that you aren't one of the bankers/exchange operating alts.
Those are the ones who will benefit the most by a further ban of financial institutes as they are given a walkway to run off and shut down the rest without any refund of depositors, made bond/shareholders. You obviously don't know anything or pretend to not know anything about listed companies as Lindsay and Cash are well 'known' company operators.

Yes, it's that difficult in SL since people can easily create ALTS or buy themselves a new account, possibly even with fake creditcard registration.

I would agree that there is a good possiblitity that major part of debts of former banks can easily have been transfered to other accounts, either through landsales or through shares transactions and new companies are being build with this money. Even without stockexchanges a good scammer will always find a new path to walk through the mazes in virtual justice so I don't think to ban stockexchanges is the right solution. People can always choose and decide themselves not to put their money in such operations and in the end they are fully responsible themselves for trusting others to invest their money. If you do not want to risk your money then go build your own independant company.

Yay my second post I am ALMOST famous..

The so called Financial Sector within SL has been beaten with a stick, beaten down to the ground. Although some operators have taken the beating of their SL lives, they remain and show the same honour that they did before the ban. Pleasing everyone is not always possible, but I admit that LL had to do something about the situation that SL found itself in. The operators who did not pack up and leave have shown that they are trustworthy and willing to amend the issues of their customers - this is a quality that we need more of in the real world, people who will work to resolve or correct, rather than packing in and leaving. I take my hat of to the "Financial" figure heads who are still around and have not run off to "The Grid". I have witnessed many slandering, spreading rumours and talking plain rubbish to a particular operator who I will not name, but am closely associated with. This operator has taken it on the cheek, not tried to place blame, but come up with a plan of action to make sure that his customers are taken care of. Why are you trying to wipe out everyone? Financial Genocide? Communism? Or just plain selfishness? When do you draw the line?

Don't punish everyone because of the actions of some greedy cheats.

Hello guys and thanks for your posts.

I understand that expanding the ban may hurt some honest people, but it seems obvious to me, that in the log run, it will help more than it will hurt. Just like after the bank ban, if the ban is expanded (which it should be) to include the “funds” and “stock exchanges” some of the operators of such operations will use it as another excuse to run with funds “Sorry, SL banned us and we don’t have time to get the money back to you. Bye.” But it will save thousands of more people from being scammed over the coming years. That and most if not all of these operations in SL are again illegal under US SEC.

If they have a legit claim and can make the returns they claim to in SL, they should approach a real world bank/fund which has the proper government backing and have that bank/fund sponsor the project. That or they should seek such government backing themselves and become chartered and regulated.

Lastly, this has nothing to do with “communism” or “socialism”. In the real world free markets, all of these operations are highly regulated and after the sub-prime mortgage mess have become even more so. Yet, I doubt we now consider ourselves communists. Remember, we are not banning finance; we are banning financial operations who have no real world license to do what they are doing.

As such, I reiterate my original post and urge LL to consider amending their bank ban to include other in world financial operations before more people are scammed, more inept fund managers possibly 18 year olds living in their mom’s basement loses more people’s money, possible lawsuits from scammed “fund” and “exchange” customers find their way into LL’s offices, and/or the US SEC or other government organizations take action. In the long term, it is better for everyone.

One point to add - this is SL - not RL. For the record I am not US based.

Yes, but Linden Lab, as a U.S. Based company in San Francisco, California, U.S.A, Must comply with all the laws and regulations of the U.S. Government. If unregulated banking is allowed in your country or republic, then by all means use a virtual world originating from there.

I have been an "investor" in the SL Stock Market since the very beginning. I enjoy it quite a bit and although there have been bad companies all in all I am quite pleased with the experience.

The same rule should apply here as RL. Donʻt invest what you donʻt want, or cannot lose.

Those who are complaining are probably sour because they THOUGHT they could make a quick buck and got burned. They probably thought theyʻd get rich quick with bank interest too until banks were banned.

Boo hoo.

For those of you who are whining please take it elsewhere. If you want fair and SEC oversight go to Wall Street. Jeez, itʻs a game! And hello? Lindens are not currency.

Maybe what should be discussed it LL NOT allowing people to take anything out of SL . . .

Kahai Kubo

We are talking about game credits - not a currency, therefore the rules do not apply.

The Preamble to the Constitution of the United States of America:

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

Promotion of the general Welfare has been disambiguated by sections in the Constitution and (for me) innumerable laws regarding all sorts of financial transactions, the object being to "promote the general Welfare." When the American government, acting for the People, has discovered commercial operations of almost any kind that have acted to decrease the general Welfare, it has established laws and regulating agencies. I do not want to ask Linden Lab to reinvent a system already devised to promote the general Welfare: regulate financial institutions. From what I've seen, SL financial institutions have represented the equivalent of several millions of US dollars. And it causes considerable pain to Linden Lab to cope with the chaos caused by collapsed financial institutions. A smart virtual world operator would sensibly defer to the experts in the real world. I applaud the enforcement of Linden Lab's edict regarding the required real world licensing of virtual financial institutions.

Do you not realize the the banking ban CAUSED the collapse of more financial institutions in SL than any fall of a sector to date? The gambling ban was a percentage of the money lost to SL residents during the banking ban. Walk up to Bank of America or Barclay International and expect them the liquidate and pay everyone back 100% in 2 weeks. Since we want to align a micro currency with real life here, consider this. The Ginko Financial was a collection of accounts over a few YEARS. It wasn't like the place sprung up over night and caused this. Businesses fail! Does that mean we ban businesses?

Ok, yes at the time, opening a bank was the easiest thing to do but at the same time, Linden Labs notion to let chaos run, set marshall law, chaos, law, is remnant of utter bullshit and laziness to do anything more than save their own necks from a lawsuit, not protect the residents. If you THINK for one second that this ban was to protect the residents, you are SADLY mistaken and probably an idiot in your first life much less your second one.

We deal in a fictional currency....and this is only an issue because of the Lindex. If we ask Linden Labs to ban the lindex, this all fixes itself but will they do that? Hell no! They won't make money off of us anymore because the currency exchange is where they make their money and the land sales, not the memberships.

Let's come off the emotion and think with some LOGIC, PLEASE?

Ginko!? Are you kidding me? Ginko was a scam from the very beginning. In fact, most of the old banks were scams and by banning them LL saved thousands of others from eventually falling prey to those, many times, ponzi schemes. You didn't hear about the MANY banks and stock exchanges which ran with people's money WAY before the banking ban? All the running with funds is what caused LL to enact the ban. When the bank ban went live, yes many people lost money, but if LL allowed the banks/Ponzi Schemes to continue, more people would have fallen into these schemes and eventually would have lost even more. Now, it does seem that the same thing is happening with these new "funds" that keep popping up and always has been happening with the stock exchanges, etc. I agree with the OP, these projects should be banned. They are in a grey area at best and are totally illegal at worst.

I'm impressed that after so much time people still believe that LL is something else than an Internet Service Provider (ISP)...

In comparsion, does godaddy micromanage their customers ? Ofcourse they don't, just like LL, if there is a legal issue they would cooperate with the govt instead of wasting resources on playing a "policeman".

Why are (some of) you people believing that LL should act differently than any other ISP ?

There's a MUST READ inverview with LL's CFO here: http://www.accountancyage.com/accountancyage/features/2215022/profile-john-zdanowski-second

This interview should explain to those of you who misunderstand the accountability of an ISP.

I'm not saying wether freedom of choice is good or bad, but you who are "government-regulation-junkies" are complaining at the wrong place.

Thats just my 0.02 L$.

I think you may have your terms a bit mixed up. An ISP is a service which provides users a portal to the internet. (Like AOL) You then use the internet connection from your ISP and a web browser (Like MS Explorer) to connect to web pages, which are hosted by companies like GoDaddy. GoDaddy IS partially responsible for what they host on their servers, and as per their TOS, if you are providing an illegal service through their servers, they will shut it down. I had a friend, for example, who ran a website and used a copywrited photo on the site. Right when his host found out, they shut the site down and ordered him to remove the photo.

LL is like a host, not an ISP. You connect to the internet through an ISP, like dialing into AOL and then view what is in the virtual world by connecting to LL's servers, (like godaddy's web site servers) with your SL client, which is like your web browser.

So yes, LL can be held responsible for knowingly allowing illegal and immoral activities from taking place on their servers, just like GoDaddy can. AND, LL holds a bit more responsibility as they promote their service as a virtual world where one can make money, while at the same time providing an exchange which allows the conversion of real world currencies to Linden Dollars, and back.

But, the thread here is not about IF LL should police their virtual world or not, as through other bans it has already been determined that they, in some cases, must. This thread is about the amending of the ban on virtual banking and how it is a necessary and responsible next step in securing the future of SL and its citizens.