Ginko Financial

Julius, please read previous posts, this has been addressed already.

Nope. I understand it is 0.14% perday, which I calculate to be, compounded daily, 66.6% per annum. Though I haven't checked the website, and am willing to be corrected.

Sorry, Sneak. I don't think it has. I have seen no even vaguely rational explanation given at all. Only the suggestion that RL returns may be diminishing. But why ? And preplanned ?

I suspect initial hidden subsidy from investors own capital. In RL, in an investment operation, almost certainly called "fraud" unless specifically declared. And who could declare such a clearly deceptive manouevre ?

I need to sleep before answering anything else, but I want to make one thing clear.

Interest rates are not directly determined by the profits of real investments;

"There is a reason why it is called interest and not dividend or profit distribution.

They are determined by our need for capital and its cost. If an

investment warrants a 5% a month interest and that is how much we

need to pay to receive funding, then that is the interest we will

pay. If the investment warrants 5% a month interest, but we could

receive the funding for it by paying 0.5% a month interest, we will

pay exactly that, 0.5% a month. The fall in interest rates is how I

have decided to "buyback" my share in those investments so to

speak. "


I wonder how anyone can justify Cyberland paying out a dividend even though it did not make a profit. I certainly didn't see any calls of "scam" or "ponzi". And no, I'm not trying to deflect attention away from Ginko Financial. But I do need to sleep.

Thank you, Nicholas, Genuinely. Whoever replied for you was wrong. If you would speak to us a bit more bang on topic like this, I promise you that I for one will give you my careful attention. I too, have to do something else now (a family baby is being born tonight it now seems). But I'll have a good try at understanding exactly what you mean as soon as I can.

Talk to us more dammit. Reassurance. It's what we ask.

Do you think I WANT you to turn out a scam-merchant ? Ignore Anshe, she tends to go over the top, and yes her motivation could be suspect. But there are genuine well-intentioned people here who want to be able to wish you well if they only can.

You do see how and why your silence has us worried, don't you, Nicholas ? Is it so hard to understand ?

That couldn't be enforced if the person had already given such information to some one else while in-world. Then such information would no longer be privileged. You can't give information to some one and then claim it's privileged. So, if (and that is the crux of the problem here) such information was given in-world it can't be considered privileged. Also, it's not against the TOS to publicize what some one else told you. It's a violation to publish the chat log. We'd all have been kicked out by now otherwise. Look above, I'm publishing something that Nathan said!

Yes you are clever... publishing information posted on a public system, something totally different than publishing something from a private conversation, there is no such thing as privalidged information in secondlife, unless it has been posted on your first life profile. the reason why that is because if you told someone your reallife home or work contact details would you be happy if they were posted on here, of course it would only be a single line of information so wouldnt be a chatlog as an ongoing coversation but would be information about your reallife that you gave someone in a private conversation, therefore this is why you have this rule in the community standards

"Disclosure
Residents are entitled to a reasonable level of privacy with regard to their Second Lives. Sharing personal information about a fellow Resident --including gender, religion, age, marital status, race, sexual preference, and real-world location beyond what is provided by the Resident in the First Life page of their Resident profile is a violation of that Resident's privacy. Remotely monitoring conversations, posting conversation logs, or sharing conversation logs without consent are all prohibited in Second Life and on the Second Life Forums."

http://secondlife.com/corporate/cs.php

This is one of the big 6 rules

Sorry, the point I have made is simple. If you tell some one in Second Life something it can't be considered privileged information. Such a rule would be completely unenforceable. There is no such thing as a "private" conversation in Second Life along the lines of the attorney-client privilege. If I tell you in-world where I live and you tell some one else, you can't be punished for giving out privileged information. If I tell you outside SL it would be different. Then you couldn't bring outside information into the game. To me it seems a matter of enforceability. I have a friend who told me in SL that he lives in Britain. I've mentioned that to other people in SL. That information is not privileged, because the individual freely provided it. The ban on publishing chat logs is analogous to tape-recorded conversations. You can still tell others what was said, you can't publish the recording.

Otherwise you could never tell any one anything about another SL resident that wasn't on their personal profile. You could never say, for example, Michael Seraph said he was from Outer Mongolia. Businesses couldn't say, our patrons are satisfied with our service if any of their patrons was known to anyone else. If I'm completely off here, please somebody let me know.

It seems that the point of the rules is that what happens in RL stays in RL. The corollary is what happens in SL is fair game. If you bring RL information about yourself into SL it's fair game. If some one else does so it violates the rules.

Does this make sense to anybody else?

Hmm I just clicked on the last page of the thread and saw this. I guess I'll have to sift through the 300+ replies and see how many other times, if any, you've used our name here to "not try to deflect attention away from Ginko Financial". I was hoping to not have to get involved in this thread. In light of your dragging me into it, however, I will be more than happy to share the observations and opinions that I've noted during my SHORT time as a depositer at your bank (the largest depositer by quite a margin, in fact), if that is really what you'd like.

At any rate, I chose to pay dividends off of the top line for the first quarter (and so far into the second quarter) for the same reason that I did many other things the way I did in the first quarter. I wanted to incentivize early adopters of a concept which was new to Second Life.

However, what does the way that Cyberland handles it's capital have to do with your iron curtain of secrecy and unrealistic rate of return, which are leading some people to believe that you are operating a ponzi? Due to some problems that were well beyond our control during our first quarter, (the same problems which you benefited from OVERWHELMINGLY, no doubt, and I think you know what I'm referring to here... in fact I think that your L$ liquidation machine may have contributed to those economic issues) we did lose a little bit of money in that quarter. So what?

The difference between our two organizations, and to answer your question from my own perspective, the reason why nobody with any common sense is calling Cyberland out here, is that we are honest and up front with our shareholders. Do you know why our investors are even aware that we suffered a mild loss? Because we told them, rather than hiding behind an iron curtain of secrecy or cooking our books. It was a very small amount too.. cooking the books would have only required a low simmer.. not really a broiler or anything.

But we don't operate in that manner, Nicholas. We don't feel any need to hide the company from our investors, because there is nothing to hide. We are completely open about what we are doing with the capital, and we are completely honest in our accounting of the state of the company.

Farther, we aren't running an L$ liquidation machine in order to invest in "websites", whatever sites those may be. We are investing WITHIN Second Life, in the future of Second Life. Due to the nature of our business, people can literally SEE the operations of our virtual corporation wherever they see Cyberland signs throughout the grid.

In short, Nicholas, I can't answer your question fully on behalf of others. They'll have to chime in here too, if they haven't already. The things that give ME such grave concerns, however, are your iron curtain of secrecy, your unrealistic rate of return, the "buck passing" and accusations that occur over at the Ginko sim when anyone asks questions of your subordinates, and frankly just your arogant and superior attitude in general.

Michael I like how make up your own version of TOS, lol. TOS SAYS : Any real life inforation that someone shares about someone else without permission is a viotation of TOS. IT does not say "if they say something about their RL to someone in game then you can repeat what was said to anyone you want".

Michael I would like to see what part of the TOS says that once something is spoken in game it is no longer privileged. Untill you can find where it says that you have to wear the "Im stupid hat", so go ahead and get used to wearing it.

It is one thing to quote a general comment and another to share RL information without permission. Again and again you try to make your own version of what TOS says. Read it again, and again, and a few more times untill you start to understand it ok? I know it can be hard sometimes

Johny, Aaron and some others on this thread: I'd be more than happy discuss your TOS/privacy concerns in this case and in general with you and somebody from Linden Lab. I am also always happy to learn how to best approach this kinda case where really different rules/ethics seems to clash.

But lets keep the priorities straight: 18 mio L$ Ponzi scheme, 60000+ US$ value drained from SL economy. Drastic stipend cut this October in response to L$ value drop as result of Ginko cash out. Lets keep this thread focused on the BIG issue!

Anshe dont take my comments as directly bashing you. But I do feel that your comments did in fact break TOS as far as I understand them. And the manner in which you accused Ginko seemed to me more than just a warning statement to residents. You may be right about the ponzi or you may be wrong. Really the only person who would know is the Ginko owner. But as we stand now no one has lost any money so I dont see a need to bash them. And if Ginko does turn out to crash for some reason and all money is lost then oh well. Everyone who invested in Ginko was warned that it could happen, so tuff luck. There is risk in all investments. To me personaly the intrest isnt worth the "risk" to me, But I would never bash them.

Anshe I do like the fact that you warned people about the risk of losing all their money (even though they should already know), but what I dont like is the manner in which you made your comments. I think that the chance of it being a ponzi are just as good as your intent being to harm competition.

As far as my TOS problem please address it back in forum so that I can be corrected (If I misunderstood the TOS) and so everyone can see what stance LL takes on the TOS.

Can we please stop talking about this? I thought it was clear I did not mind her posting what she posted. It wasn't even a particularly specific fact.

Shaun:

If you had bothered to read the thread, you would know that I was replying to a specifc line of thought. To make that clearer:

Question: Reward early adopters of the Cyberland concept ... with what?
Answer: Their own money.

I will stay silent and not say what I think about Cyberland in general. Why? Because anyone can look at the data available and make the same conclusions I have. It's none of my business what others do with their money.

What I have a problem with is not her ponzi theory or the fact she posted it on the forums. It's her threats against us. I talked to Anshe to figure out what exactly she intended to do and to be honest, while her project could possibly force us to enter bankrupcy (which does not mean actually losing money, that is entirely out of her control if what she said she would do is all she intends to do), it's something she has a right to do.

A different take on the big issues:

A scheme alleged to be a ponzi scheme without proof. If one bothers to read the whole of the article there are a number of schemes which appear superficially to be ponzi-like but which are legitimate. Ginko bears some similarities to such things, but doesn't appear to use the short-term incredible profit margin - 20% in 30 days or double your money in 90 days are the examples given. At 0.15% it takes 83 days to see a 20% growth and 464 to double your money. Under the new interest it's 92 days and 497. That's still a fairly high rate of return, but a quick survey of some government backed schemes offer doubling your money in 540 days, certainly a similar enough period of return. The announced longer term stable rate (0.1% per day) is still good, but it's taking longer than these schemes to double your money. Of course it's possible that these are all fraudulent too, but Occam's razor is starting to suggest that there are several legitimate businesses offering similar returns to those Ginko is saying are it's longer term goals.

How does one drain money from the economy? Even if it's true that there has been a drain of money from the economy it's a tiny amount compared to the total money in circulation, or even a small amount compared to the total money that changes hand every week according the figures that LL provides.

RE Ginko being responsible for the reduced stipeds: Another comment without any evidence to support it, but a convenient ellision of ideas that Ginko is causing inflation. Show us some convincing causal data. Work out how to get around the data and statements from the people that actually made the decisions about changing stipends whilst doing so. Given the statement makes comments about oversupply of L$ leading to the inflationary economy, surely Ginko are HELPING if they're draining money away... Some logic and consistency would be nice.

I know Ginko doesn't claim to be a bank, but I went and did some research into banks and their histories. There are several that started primarily as savings institutions even if they've diversified since. Most of them started without government backing, and in this country before any government regulation. Government backing and regulation was largely introduced to protect the people with accounts (their citizens after all) from banks going under due to changes in the economy. This expanded to include regulations to stop swindling and fraud by people claiming to run banks, but they more or less started from private individuals and people deciding to risk trusting them. SL doesn't regulate any trading more or less, so we probably shouldn't expect it to regulate "banking", but even with such regulation banks still go horribly wrong - look up Nick Leeson and Barings if you don't believe me. The "best practise" that banks now use derived from the ones where the individuals said "We'll do this for you" and then lived up to their word - remarkably similar to what we've so far seen from Ginko.

Ginko could still be a ponzi scheme, sure. But I'm afraid the attacks are becoming more and more hysterical and more and more implausible and illogical. It makes me more and more suspicious that they're based on something other than a desire to help us all us poor fools.

/130/ec/72527/1.html#post754079

a previous post ive put up not long ago but extremly relevent to this as far as ive seen..

interesting...
Mmmmm

During the days of the "New Economy", my RL finantial consultant approached me with a new type of investment fund. I can't remember the details, but it was something like this: I would buy a "coupon" emitted by eBay for a substantial amount of money, and "bet" that eBay would have over a 70% growth in the share value in one year. If I won that "bet", I'd get my money back in a year plus 60%; the excess would go towards the bank.

The bank thought about the past performances of eBay — over a 100% increase on the market share value in the past few years. They also trusted eBay to do about the same, and their worst-case scenario for the upcoming year was around 85%. So, on the projected worst-case scenario, I'd win 60%, and the bank would get at least a 25% return.

eBay, of course, would get all the money from the many millions of people buying these "coupons" (note that they weren't neither "shares", nor "bonds", nor even "loans", put it into good use, grow even faster, and gladly pay back all the money with a lot of interest.

The first few months were great — I think I remember that after 3 or 4 months, eBay grew around 40% or so, and all looked cheeky. They were well beyond the initial estimate; the projections, taking into account that their growth would be different every month (say, Christmas always attracts more customers, like Valentine's Day, and so on), would be a growth of perhaps 120-140%. I'd just get 60% of that growth, the bank would get the remaining. They smiled benevolently

Then the Internet bubble burst.

eBay's growth became negative. After a few months, the 40% growth disappeared completely. The coupon suddenly was worth less then what I had paid for it. These were frightening times, and my finantial consultant just shook his head in despair. There was no way to get my money back.

eBay's executive officers, nevertheless, managed to deal with the tragedy as best as they could. By the end of the period, even being in the post-bubble phase, they managed to grow again, and if I remember correctly, they still managed something like a 20%-30% growth that same year. Not bad at all, considering the thousand companies that failed, shut down their operations, and simply ceased to exist.

Of course I lost all my money on the "coupons" — and so did millions of others, including the banks that supported this operation. eBay continues to exist to this day. They survived the Internet bubble. They have millions of happy users (including myself!). Pierre Omydar has not only survived these "New Economy" tragedies, he's investing in successful companies like... Linden Lab

Now let's see what this short example tells you:

1) Finantial consultants are not omniscient. They can only advise you to the best of their knowledge, training, and what they can estimate from market trends. My personal finantial consultant was not "scamming" me. I'm a mature adult and allegedly able to make my own decisions. He presented me a high-risk (but high-return) investment in a solid, strong company, with good past performance, a large customer base, and a very interesting growing tendency. None of these things were "lies". eBay is still with us, is still a solid, strong company (probably much more solid than during the "New Economy" days) and is still growing. It simply stopped growing for a few months because the Internet bubble burst. And why did it burst? Lack of trust.

There is no way my finantial consultant could have known that. He warned me about the risks. eBay's coupons (note: they weren't "physical entities", just a line on a printout, so I can't even scan them and post them online somewhere ) also clearly said the same. eBay never revealed their "plan" for growth — ie. they didn't told us what they were going to do with our money. We simply trusted them.

2) Banks usually are not scammers! Yes, they're doubly-controlled — by their shareholders and by governments and their regulatory bodies. My bank trusted eBay to grow according to eBay's own predictions. I trusted my bank to make good, solid investment decisions. No customer of my bank gets information on all finantial transactions and business plans and where they invest their money. We just get a quarterly overview, and that's the same thing the government gets. Thus, the thought never came to my mind, as an indirect investor in eBay, that this was all a big conspiracy between eBay's executive officers, my bank's executive officers, and my finantial consultant to "extort" naive people's money and make them all richer. Of course my loss was bigger than theirs; as said, eBay managed to survive despite everything, my bank is still around after the bubble burst (and growing their profit around 30%-40% per year since 2003), and I'm the only one who lost everything

Can I blame my bank? Of course not. Should I repeat it again? Economy is trust; high-yield investments are high-risk ones. I was warned, and so was my bank, that this "scheme" of eBay's could go wrong. eBay is controlled by the US authorities, and their "high-interest coupon-paying scheme" was deemed absolutely legal, despite eBay never telling anyone what they were going to do with it. My bank trusted that eBay's managers were good enough to know how to invest the money properly. And that's what happened; no one could predict when exactly the bubble would burst.

3) Business secrets are the soul of business! This is often hard to understand in virtual worlds like Second Life, because we are too big an anarchy without any laws or controls. Worse than that: we are an anonymous anarchy. Nicholas claims to live in South America; I claim to live in Portugal; but how do you know? In this age and era of the Internet, anyone technically-savvy enough can "forge" IP addresses and have web sites everywhere, so it's basically impossible to know things for sure — unless you happen to be peeking over someone's shoulder. What we do is create relationships of trust based on our actions. Nicholas has been operating successfully for a year or so. I trust him to know what he's doing, like I trusted Pierre Omydar to know what he was doing with eBay. I never asked Pierre what he was doing with the coupons. Eventually he was buying drugs in Colombia or financing terrorists in Iraq — I have absolutely no way to say this did not happen (and yes, I know how many banks in my country have financed arms during the Iran-Iraq wars — both sides at the same time — and with the overall "approval" of many governments, including the US one. But I still trust the banks not to do that again. I may be just naive, but that's how the Economy with a big E works!).

But in general, I expected Pierre to have an incredibly clever plan to make eBay grow to twice its size in a year. I trusted him to be able to do that. I didn't ask how — and neither did my bank, nor my finantial accountant. We expected it to be legitimate and legal, just because that's the way eBay has and will continue to operate. Things went wrong, but not due to Pierre's fault, or eBay being a "shady" operation, or the banks financing "illegitimate" operations. It's just the nature of the economy. You have to trust people on their "secret plans". Revealing them simply means that they're losing a market advantage. And it would also mean that others would copy their "secret plan", and aggressively compete on the same market. For you, as an investor, it's the whole world of difference of betting on a horse who runs on its own track, or betting on one of many. The "edge" you have by not revealing your "secret plans" is saying to your investors: "trust me, I'm doing something no one is doing right now, and until they figure out where I'm investing, I'll be able to pay you a high return on your investment".

That's what a "high risk investment" means: trusting people with money to do some investment that nobody else is currently offering.

Now let's get back to Earth for a while. How many similar "high risk investments" are there available in the world? How many of those are scams? In the real world, the rate is perhaps a billion to one. You simply don't have an idea on how many legitimate high risk investments there are because you don't have the whole picture. The public only gets to notice the few dozen illegitimate investment types, because these are the ones that get media coverage. As an example, how many among you have been offered the "eBay coupon" investment? I can tell you that around my country, of probably 6.5 million potential investors (the ones over 18 years and with a job), only a few thousands (perhaps less) ever heard of it. It never made the news — it was just one legitimate business investment that went wrong. Over 2-3 years, during the bubble bursting days, I have unfortunately seen a few dozens of legitimate high-risk, high-profit business investments going wrong as well. Neither made the news; the public never knew. Over the same period, however, you got all sorts of stories of "illegitimate" business investments, because those are stories for the media.

Secondly, how do you know that someone is trustworthy enough to deem worthwhile to invest in their business? Pierre Omydar collected Pez dispensers and set up a website to sell them. Is that the kind of person you'd trust your money with? Philip Rosedale made a nifty piece of software to stream audio over the Internet. Is that someone you'd be willing to bet US$ 8 million that his company would succeed? It's so easy to make claims about these people after the fact! But in the mean time, interested investors can only do one thing: see if they can consistently deliver their promises. Pierre's Pez-selling-website consistently worked: you wanted a Pez dispenser, you could buy it from his site, and he would deliver it to you. Philip's streaming technology actually worked every time you tried it out. So, they were visionaries with a sound business model, and people trusted them, and invested in both, just because they consistently delivered their promises. This still goes on to this very day. And if you take a look at Second Life, we still don't know how it works, how LL manages to balance their accounting to be profitable, and why the Big Entertainment Companies disdain LL's puny attempts because they cannot see how Philip is making any money. The truth is, LL is still around, new customers are still entering SL, and every day dozens of new people come all over the world to start new and interesting projects using LL's technology/platform.

Ok, now back to the issue. I'm not going to comment on Anshe's initial intentions because they are beside the point — we all know how aggressively Anshe pushes her own business abilities to successfully run her business, and that's also why so many people both trust her and invest in her current operations. To an outsider, this looks like a very cunning strategy. Anshe knows very well how the market forces work: they're all based on trust. Apparently, she neglected to understand a key element of the economy: money and power is not just "the leader boards". By thinking she was the "richest person in SL" without competitors, she was in a very comfortable position. Too late she found out about Nicholas and Ginko Financials, as she personally admitted — here was an economic powerhouse, with almost the same amount of finantial assets as she had (around L$ 20 million), and she never even heard about him before. When she entered the finantial market as well — planning to offer bonds with a 10%-20% yearly return — some of her close friends/advisors just said: "oh, but you won't be able to compete with Nicholas" to which she highly likely answered: "Who the hell is this Nicholas?" When she understood Nicholas' operation, it was disappointing, as someone used to look at the leader boards to understand who is making money, that Nicholas' assets were mostly off-world.

Now, what does a business person do in this case? Anshe wishes to expand her operations, which makes a lot of sense — look at SLExchange, starting with a "simple" e-Commerce shop, then doing auctions, finally entering the currency exchange market, and so on. When you grow, you diversify. Apotheus, however, is no "threat". A big player in the finantial game is a threat — specially a very successful one, which has done in terms of finantial investments in a year what Anshe has been doing with land for two years or so.

Anshe thus had two choices. The first one would be aggressively competing in the finantial market of SL. This is not easy for a "newcomer" in this area of business. Doing finantials professionally is not just a matter of setting up a new alt, having a web site, hiring a scripter/programmer to do some clever devices for the ATMs and such, and expect things to go well. This would be a "pappa-and-momma-savings-account", not a finantial institution that would put money to good use, investment-wise. Good, aggressive business owners are not necessarily good finantial experts. It's a completely different market — you don't push products (or land) and services in exchange for money, but you work on a completely virtual world (economy) based on trust. So, since I hardly expect Anshe to be a finantial expert, that would mean outsourcing her finantial operation to someone else, which I'd imagine she wouldn't do easily. I mean, how many "finantial consultants" in SL can Anshe realistically trust in? (You've seen my example about trusting on RL finantial consultants...)

So, this leaves out option #2: get rid of the competition. And here Anshe did her homework quite well. Since Nicholas' operation — like any other finantial operation — is based on trust, let's undermine that trust base! Here are Anshe's weapons:

1. Land is important to LL (since it gives LL direct revenue), while banking doesn't. This means that a land baron will always get more attention from LL than a finantial mogul. By destroying Nicholas' reputation, Anshe is not endangering LL, and can go ahead with full confidence (imagine the reverse situation — who, do you think, would "win"?)
   
2. Anshe's the richest person in SL, as measured by the leader boards. She has the most assets, and the most money, and the most customers. This is visible to all. For the common SL resident, looking at physical assets is a direct verification of credibility. Put on another words, most people can understand how a grocery works, and you can see how successfully a grocery operates looking at its inside, and their accounting makes sense even for non-experts. Try to explain to someone how futures work and they'll get a headache and give up; and someone on the futures trading just needs a laptop, a phone, and an Internet connection these days. So, when Anshe says something like "at least everybody can see how much land I own and how much money I've got", she's playing on the regular resident's notion of "value", tied to physical assets. Value tied to finantial assets is way too esoteric for the average person to understand.
   
3. Anshe can build upon her past performance to give her audience an idea that her future performance will be similar. Everybody in SL knows — it's a fact, an undisputed truth — how Anshe started SL with US $9,95, created her brand of clothes (still some of the finest in SL...), then bought her own land for the shops, grew to become a land baroness, and now starts to diversify (with a currency exchange and other products — like the upcoming Anshe Bank). So people expect Anshe to do the same in the future as well: be successful. However, this is actually the first finantial fallacy — the past can never predict the future. Tomorrow, LL could be bought by a different company, with quite different ideas on how land is bought/sold in SL, and Anshe could be out of business in a couple of days. Whereas Nicholas and the finantial types do business investments in various ways — if something like "land" would disappear, Nicholas and his team would simply invest in something different. That's how banks survive wars, revolutions, and law changes — being very, very good at adapting to change!
   
4. Anshe's reputation allows her to stretch slightly the rules, both in-world and in the forums. Notice that her own post starting this thread can be read in several different ways. In case someone really pushes the issue, Anshe can even apologise publicly for some misinterpretation of her words, and concentrate on what is important to her: what are Ginko's finantial assets? This means that she won't ever get even a warning from LL for violating ToS. She can reasonably claim that she's doing all this just for the "benefit of the community" and "the right the community has to know", and if her wording was not perfect, she'll apologise, and promise to write more carefully in the future. That's rhetoric at its best!
   
5. Her words are quite cleverly constructed — unlike many other posters in these threads (I'm not mentioning names!!) — she knows the difference between "stating facts" and "making people think that she's stating facts". Initially, Anshe did not wish to "tell the world that Ginko is a Ponzi Scheme". That would be simply libel. She doesn't know that, like she doesn't know about the billion high-risk investment schemes created every day by banks all over the world — many yielding easily 60-70% returns — who are perfectly legitimate. What she did is much more clever. She quotes "some friends" that have "read up on similar schemes" and that "concluded" that it is "highly likely" that Ginko is a Ponzi scheme. And then she welcomes us to read about it on the Wikipedia and take our own conclusions. And finishes the post apologising in advance if there is no reason for this conclusion, and invites Nicholas to offer proof it's not a Ponzi scheme (or any sort of scheme).
   

Masterful I'm sitting at the balcony, watching the show, and applauding — Machiavelli would be proud! With one single post, Anshe was able to do the following:

1. never accuse anyone directly (so, no ToS violation there)
   
2. admit that this reasoning is not entirely hers, but shared by "some friends"
   
3. present her conclusions, based on similar schemes
   
4. invite us to take our own conclusions and offering us links where we can read more about it
   
5. definitely raise some doubts about Nicholas Portocarrero and his credibility — all it takes for a finantial operation to fail is to shake up its "foundation of trust"
   
6. present Nicholas with a dilemma: if he reveals his business plan, he loses his edge, and his operation will fail in the short term — and give plenty of others the ability to copy-cat him, thus, in a sense, he'd be betraying his happy customers' trust, failing to protect their return on investment; if he doesn't reveal his business plan, people will start to ask all sorts of questions about his "credibility", thus also undermining his trust.
   

Like any good chess player, you win your moves when you are able to position your adversary in a lose-lose situation. As said, this was done admirably well!

Now, what are Nicholas' options? He can't fight back — his operation is always based on credibility and trust, and mostly about proving results, delivering promises, all the time. By initiating a counterattack on Anshe, he'll risk everything he has built so far in the complex world of SL finantial operations. So he has to gamble on his single option: that some people will leave Ginko if they feel they can't trust him any more (his posts, both here and on the Ginko forums, repeat this idea), like it happened in the past with GOM's shutdown and other finantial "hiccups" of the economy; but that the remaining customers will be able to look through Anshe's ulterior motives and understand what it's all about: a new fight for the control of the finantial power in SL.

Nicholas is a professional in the area. Banks get attacked iRL in the same way that Anshe is attacking Ginko. This happens all the time. While sometimes a bank may issue a statement like "none of our operations are illegal; we can guarantee that we don't finance web sites with child pornography, arms trading, or supporting terrorist groups", there is not much else you can do about it. If you trust Nicholas, you know what he is offering you: a trust-based relationship on a high-risk investment that has around L$ 18 millions from happy customers that got exactly what Nicholas promised him: a high return on investment. He never made any subsequent claims. He always told his customers that he did most of his investments first on high-return businesses in SL, like casinos, but that he needed to diversify outside SL to continue to give about the same rates. He always said that the returns would diminish over time (I asked him what the interest rate would be for a L$ 1 million investment in Ginko, a long time ago; his answer was precisely the same as the one he gives out today: less than if I'd invest just L$ 10,000 or so. His business operation is based on consistency). He said there were no guarantees (like the eBay coupons I once bought — I had no guarantees at all) and that no government was overseeing his operations. So it's up to the investor to place their trust on Nicholas' high-risk investment — or not. As a matter of fact, I personally thought he was a former hedge fund operator — I'll leave to you the homework of googling that up — who decided he could do the same in SL by mostly working with the many currency exchanges with different values for the US$/L$. But the truth is I never asked — because Nicholas would have never answered! I (and all other customers) had either to trust his finantial abilities, or not.

I must admit I watched this thread with a lot of interest. It echoes so many parallels to RL "coups" of undermining competitors' operations that you could use this as a case study for some MBAs At the end of the day, I still think that Anshe is brilliant and started this "trust undermining operation" almost flawlessly. In the past, however, Anshe tended to make two mistakes after her initial posts: first, losing her head (this makes her post things below her usual cleverness, and thus people pick up the flaws quite quickly); secondly, but perhaps more important than that, she tends to underestimate her adversaries. Being in SL for such a long time, and wishing to enter the finantial business, it's almost unexcusable that she had never had heard about Ginko before, or not given Nicholas the credit to generate the same amount of money she did in half the time. Underestimating the competition is something you can't afford to do. When the Anshe Bank starts its operation, she'll have to give her own customers the needed trust that she's able to run a successful finantial operation as well — starting with not underestimating her competition. I wonder if she knows that other groups beyond Ginko and Cyberland are also offering other kinds of finantial products right now — like offering bonds with certain guarantees (like, for instance, the Neualtenburg bond model). Good business starts with excellent market analysis, and it looks like Anshe is exploring unchartered waters with which she's not quite familiar yet — and hasn't done the proper homework!

To both Anshe and Nicholas, my sincere wishes of a great success. The finantial wars will be a pleasure to watch. I remain a very loyal customer of Ginko and will be eager to experiment Anshe's bank as well.

I have been asked by LL to pass along this note to you:

Your word limit for the month of November has been exceeded. You may not post again until December 1, 2005.

Grin. Just joking with you Gwyneth.

Eloise, as always, my virtual hat is off to you You're ever so bright to point these "tiny details" out. You're very, very right on what you point out.

Yes, I also believe that all this thread is about using good rhetoric to manipulate people's opinion to undermine a competitor's trust base, making them lose their customer base, and thus entering the market more safely.

Ambiguity and a good argumentation technique — both admirably well employed by Anshe and many others — is more than enough to shake people's trust and make them think a bit by themselves, reaching the 'wrong' conclusions, just because they were carefully 'pointed' towards what seems to be the easiest explanation.

It also helps a lot when most of your audience can't understand the complexity of the underlying model, simply because the model is far beyond the average person's experience. The media do that kind of opinion manipulation all the time. The reason they're so successfull is just because they know how to properly give 'hints' for the average reader to point them to the wrong conclusions, knowing fully well that they aren't unable to reach any other, due to their lack of knowledge on how things really work.

I'm definitely not accusing anyone (I am definitely not an expert!! — that's why I always worked with financial consultants, for them to explain things to me), but I'd be very hard pressed to believe that our 85,000 residents are experts in financial transactions. As I pointed out previously, I don't even believe that Anshe has any background training in banking financials (I have never found her claiming to have it). But she doesn't need that kind of training to gently manipulate the 'masses' towards her intended goal: raise doubts about Nicholas (who can't explain how his operation works in layman terms, and not without revealing his business plan) and undermine trust in Ginko, just because the average resident is not able to understand anything beyond a Ponzi scheme, which is quite easy to explain.

However, we do have many residents who have a financial background. They're busily day-trading on the many currency exchanges, profiting quite a lot, and being very, very hush-hush about it, and laughing at our puny attempts to make any sense of what goes on in the financial sphere of SL

I'll finish this post with a piece of advise of a famous SL resident:



I'll leave it to your googling skills to find out who said that, when, and where.

Gwyneth, this was one nice and interesting story. Really, one of the best written Anshe conspiracy stories I have seen

Unfortunately, I have to break it to you: I currently have no plans at all for one "Anshe Bank" or any such like thing. There is nothing I would love more than Ginko actually being trustworthy. I would be their first and most happy customer, earn big interest rate on my L$.

Pressing Ginko to reveal the necessary information to us has the following effect for me:

- I am making lotsa enemies
- I get lotsa negative attention from people who disagree or may loose from the Ponzi scheme to be stopped
- People like you come with the conspiracy theories and make me appear evil
- I might even become scapegoat for whatever goes wrong with Ginko

Or to sum it up: I just get mud and dirt from this. And I was 100% aware it would happen before I even open my mouth the first time.

However, if either of the two happens I also get something out of this:

a) If Ginko tells us where those 16 mio L$ went and provide proof to Linden Lab, I will be happy happy because then I would be able do rational risk/chance analysis and actually use their service

b) If Ginko remains secretive and acts like one Ponzi schemer and people realize they risk and likeliness of big scam, withdraw their funds or not deposit, then I also win. The prospect of saving many Second Life users from loosing their money in one scam, to prevent the bad press and the harm to the SL economy of one ongoing Ponzi scheme with one terrible crash at the end, yes, this would be one big gain in my eyes. Providing this to the SL community and the SL project as whole would more than make up for the heat and the damage to my business that I expect to receive for being insistant on this issue here.

i just remembered something else

this is a privatly run buisness (in the buisness term and social term), and is not a plc, therefor even if it was a rl company, it would not have to show its investments publicly

although i would like to see what goes where, i cannot demand to see that infomation

still thinking this is a McCarthyism ( http://en.wikipedia.org/wiki/McCarthyism )

im quite surprised by the backlash this has brought, exspecially in a world of casinos where the odds are most definatly greater yet has a very high turnout still

im in on these odds - now heres to hoping my gambling partner doesnt fold

kornation
from the kornhole (your choice which)

Anshe, first let me say congratulations on your successful endeavors in sl.

You took some serious risks when you were building your empire, (land was a serious risk when you started your monopoly........not now .....because you own it all and control the land prices in sl) but regardless of that, you built your empire on risk.

If I want to invest ALL my money from my texture business in Ginko ...whether it be 50$L or 50,000$L ...IT IS MY BUSINESS and none of yours. I know the risk, same as you did when you started your business. Regardless, of if Nick wants to say where the money is invested, I KNOW THE RISK AND ITS MY CHOICE.

So, Anshe, STOP IT...unless you are willing to let us tell you how to run your business ....QUIT trying to tell us how to run ours.

And do I believe, that you have not played a hand in manipulating the money market to fit your needs...NOT ON MY LIFE!

What?