Ginko Financial

I have heared about Ginko Financial some time ago, but never took closer look as it did not seem relevant for my business. They are neither competitor nor have I been in need of any banking services in SL.

I would also like to say that all people at Ginko I ever dealt with were always polite, prompt and friendly.

This week I did take closer look at Ginko. And what I learned surprised me. Let me list some of what I learned and, please, if I am wrong correct me:

1. Ginko is fully owned by Nicholas Portocarrero.
2. Only Nicholas takes responsibility and guarantees for the accounts held by Ginko
3. Nicholas has sofar collected about 18 million Linden$ from people
4. Nicholas currently owns less than 2 million L$
5. About 16 million L$ (which would currently be more than 60000 US$) Nicholas sold
6. This money Nicholas used for "investments"
7. His biggest investments are in "websites"
8. Nicholas tells people that Ginko is one bank that they can desposit and withdraw their money any time
9. Nicholas borrows short term money, aquires short term liabilities, gives the illusion of short term liquidity and invests it in long term projects
10. Ginko pays 0.19% interest per day or 1.2% per week, which would equal 85% yearly rate
11. RL banks in South America are not willing to lend money to the owner of Ginko. For this reason he is forced to raise money in SL to finance his "website" projects.
12. We have no information whatsoever about revenue generated by any "investments" Nicholas used the money for that he took from people
13. We have no information that Nicholas ever made any profit with any serious scale investment in the past.
14. There is no banking laws in SL regulating or controling "banks"
15. Money you deposit with Nicholas is not insured
16. There is no government securing your deposits
17. Linden Lab explicitly stated that they will not step in if Ginko goes bancrupt

As you know I am one person who only needed 9,95 US$ investment to be successful in SL and to build one huge business. If economy would just be as easy as "money makes more money" then I would never have received my chance. Others, with more money, would have beaten me. Right now I have more than 10 mio L$ on my SL account. There is absolutely no low or medium risk investment I could conceivably think of, neither in SL or outside, that could generate anything even close to 85% interest in one year.

I have talked to number of people I know: business consultants, RL business owners, people working for banks. I did research on the Web. So far I have come to one preliminary conclusion. Please note that this is simply one working thesis or what I currently consider the most probable explanation. However, it would be unethical if I would keep this to myself. I really do hope that Nicholas or somebody else can proove this wrong.

But currently the only explanation that I can possibly think of and what my bank expert friends have pointed out to me is that Ginko is a Ponzi scheme. A Ponzi scheme is one type of investment where interest is not paid by generated profits, but by money taken from new investors. It is like one snowball system or pyramid scheme. New investors are lured with the promise of unusually high profits. Early investors are happy that they earned money, word of mouth spreads, more and more people join the scheme. Once the influx of new investors slows down or reverses, the system crashes with one big bang.

I, and almost all people I consulted on this, based on information we have about Ginko believe that Ginko is such Ponzi scheme.

I would be very happy if somebody could proof me wrong and provide some information that allow me to come to one different conclusion.

I had money in it for about a month. But then yeah, I realized that there's simply no way a .19 daily interest rate is sustainable for very long.

Either that or some shady stuff is going on in RL.

I'm just assuming, though, I have no concrete evidence. Just a hunch, as it were.

BTW, the interest rate had dropped to .15 daily when I left.

Yep, I realized this a long long time ago, but it looks like Anshe did more work into researching, GJ Anshe. Thanks for the heads up!

you're just jealous.

I don't think jealousy is a factor when it comes to business ethics and profits with Anshe. She has nothing to gain by posting that thread, she did it for all of you I knew better then to put my money in something that seemed to good to be true. Just beware of where you "invest" your money Thanks for the post Anshe.

But I'm sure your comment was sarcastic Kris lol.

For all you we know this money could be used as laundered money for trafficking children as sex slaves.

I have to say, maybe it isn't a ponzi scheme, but anyone who invests money without some knowledge of what it's being used for deserves whatever karma decides to deal to them.

If it does turn out the money is being used for some seedy purpose, a "oh I didn't know that" is absolutely no excuse.

It's like getting really drunk and then driving over someone. We're all adults here, we should know how dangerous money can be.

I have my own opinions about what it may be, but I won't just start throwing unprovable accusations. That much interest is fishy though. If he could make that much money off of money, why would he be giving away part of his profits to SL still. I would think he would pull out of SL, and use what money he has alreay made to make even more money than he is. Unless of course, he finds other benefits than making money by dealing in SL.

like tax evasion?

By stating an interest rate of that magnitude, it is not a stretch to see a Pyramid. Just a glance at the website indicates either very poor word choices or an attempt to obfuscate.

On the one hand, it is stated up front that people can open "savings accounts with a daily yield", but further reading indicates that the money will be invested and that there is no guarantees backing what can only be termed an "investment" not a "savings account".

I won't speculate as to Ginko's intent, but people should be very aware of the risks involved with investing in a system like this.

heh - I always seem to have perfect timing (/sarcasm).

I just opened up an account with Ginko last night after a trusted friend told me he's been doing well with it.

We'll see - I'm not quite ready to just pull my cash out, but I'm definately cautious here. It'd be nice if Nicholas could respond to this thread, and respond to the concerns everyone has put out here.

From reading the notecard last night - while the interest is 0.15% per day, that interest is only paid on balance increments of L$1000.

So, correct me if I'm misunderstanding this - but interest isn't *truly* compounded daily unless you have an account balance large enough to earn L$1000+ per day in interest.

Or am I misunderstanding how this works?

My RL Credit union pays 1.5% interest on my savings account. Granted, that's insured - but what is making this interest rate concerning at 0.15%?

Something to consider is the fact that the average lifespan of an SL user is short, and there is no such thing as inheritance... you could make money with a "zero interest bank" simply by taking the money from people who disappear without cashing out.

Trav, your credit union isn't paying 1.5% per day.

I knew it would bit me in the ass someday when I stopped taking Math courses at Algebra II

0.15 over a year is 72% interest.

No one ever says they're going to pay 72% interest.

I wish I had the notecard handy, but I'm at the office.

It did say something about interest being paid only on balance increments of L$1000. Is that significant here? or irrelevant?

Yeah it means all the peons aren't compounding.

Well, I feel a little better now.

I had deposited 75% of the Shelter donation money into Ginko. We survive totally of the generosity of the community, and I was thinking it was best to have it grow somehow rather than just sitting on the Sheltered Ambassador account.

Anyway, I found out you can make a withdrawl thru the Ginko website - I went there and it was processed immediately.

For now, at least until I can feel a higher degree of confidence, I reduced the amount of our donation funds in Ginko to 10%.

I hope this is just a false alarm

I was signed up with them for about 2 weeks.. Just long enough to see that:

A. Yup, it's true, .15% per day interest from my experiences...

B. If enough people are involved and want to see their interest keep rising, well Anshe linked to the definition of Ponzi scheme right above, and I have a hard time seeing how this could NOT be something as such... The only other scenario in my head is that he's using this as a way to get a lot of capital to do something lucrative (like some porn website or something), in which case it's still pretty risky... I personally wouldn't be surprised at all to see it collapse, I'd be more surprised if it turned out that it wasn't a scam...

One thing I should mention to be fair... Anshe said "They are [not my] competitor".

Ginko recently announced the development of GinkoShopping, a competitor to SLExchange. It was stated by Nicholas in the Ginko forums on Nov. 5.

So is Anshe drumming up this buzz, knowing it's going to grow and grow because she really is being ethical, or is she trying to destroy a compeitor before they get off the ground with their competing service?

The system itself actually does not care anything about L$1000 increments, we instead use a sort of virtual cents system, in that we actually keep track of a virtual "linden cents", which do add up to full dollars over time, just like it would with USD. So, your interest is compounded as true as possible, regardless of how much you actually have in the system.

As for if the notecard itself actually says anything about this, I will have to check it and have it corrected if it does. There was a point where we operated off L$100 increments, but our documentation has long since been rewritten several times. It's possible something slipped through, and I'll have to check it.

-Hinoserm

Good question, but either way, she raises valid concerns.

dittoing Lordfly

and laughing heartily at Kris's statement

Anshe,

Even your own points do not add up to Ginko being a Ponzi scheme, but rather a fund run by a successful investor. You are correct to point out that Ginko is risky, but they state that themselves. People should not deposit Lindens that they can't afford to lose.

You point out that you yourself have turned a 9.95 investment into an account of L$10 mil. You've done that by turning land into money, right? So you should know that there are many people who are equally successful turning money into more money.

I have experience with RL investments and Ponzi schemes. It is true that in RL very few people advertise a reliable return of more than 50% yearly. But it is known that a successful Forex investor can achieve 50-100% yearly or more. Yes, Forex is risky. But people who trade Forex consider it to be less risky and more profitable than stock trading.

Also, I believe interest rates are very high in SL, anyway. I believe I saw someone offer a loan with an interest rate of 10% per (month?). Which in APR would be over 100%. And, last I read, Ginko said that they make their income from loans. Eggy's point about customers who disappear is also true, and while it is a risk to lenders, it could be quite beneficial to Ginko.

Lastly, even if Ginko is a Ponzi scheme, does anyone care? They aren't illegal in SL. And as long as Ginko is financially sound, that's what matters.


It can be.

If it is a Ponzi scheme, then it is not financially sound.

It's meant to be a risky. Hence the .15% interest rate.

Would the business model be considered any more credible if the interest rate were 1.5% instead of the current .15%?

If there were any measure of insurance against risk in this endeavor, then wealthy SL citizens like any of the "top 10 SL wealthiest" would be making a mint by simply depositing their money, and basking in the sunlight of a hugely generous risk free return for their sizable accounts.

Obviously, I can't speak for Anshe, but I am certain that her concerns arise not from a concern for the community, but for the fact that she would love to take advantage of this investment opportunity, but her doubts as to the legitimacy of the model brings her pain that she is not able to capitalize on it.

Ginko is not new, it has been around for approximately a year, give or take a few, and it has been very reliable to this point. Is it any wonder that this record of reliability is what has gained the attention of the most astute business person in SL?

For the record, I am not advocating that anyone invest their money in Ginko. Being weary of its risks is wise. It may indeed go "kaplunk." But then again, it might not. And ignoring its wonderful returns at this point can be quite costly.

For all we know Nicholas Portocarrero is a wealthy man who has money to burn and simply sees this as a hobby.

Perhaps he aspires to fulfill a dream of starting the first bank in SL and building it to become a huge success regardless of the cost. If this is true, then what better way to increase the initial accounts by offering a generous interest rate with the intent of lowering it when the bank has built a solid foundation within the community.

But the real bottom line is, nobody knows.

And that's why the interest rate is .15%.

It's a risk versus reward thing. The riskier the investment, the greater the return.

I know Anshe is hoping for direction in this thread but I'm afraid she wont find it.

The decision ultimately, will have to be her own.