Ginko Financial

Hello there, everyone.

Firstly, I'd like you to read this letter from me to Geiko Financial:

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Hello there.
I'd just like to question the security of the money that I could/would invest, if there was any. Security, that is.
You clearly state on your website that, and I quote, "...we cannot guarantee that we will never go bankrupt." This just makes your little enterprise look like a scam. You could just pull out at any minute and take everyone's money.
The thing is, I was going to invest in excess of L$1,000,000. This would mean you'd have to keep up with a monthly interest on that for approximately L$50,000. 5% a month. Of course, this money wouldn't be secure, or would it?
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This is the new-ish bank that has made its way into SL world. I was quite intrigued at first, of course. So I tested if their ATMs and website work. To my surprise, they worked extremely well, fast, and are really effective in a simplistic way. A total gem. Alas, from my letter to them, you see that my money invested in the bank is not secure.

I haven't had a reply from them yet, but I presume it's going to be something like, "No, sorry."

Any thoughts on this one?

Their website is: https://ginkofinancial.com/ and/or http://www.ginkofinancial.com/

I often had some doubts about Ginko, but one possibility is that Ginko Financial is really a massive short position on the L$.

By converting the L$ to USD and earning interest, Ginko could be speculating that the L$ is going to decrease in value faster than they have to pay out interest.

By leaving your L$ with Ginko you will be able to hedge against the devaluation of the currency without having to convert into USD.

Unfortunately, if the L$ appreciates quickly in value, Ginko could very well go bankrupt and everyone would be left with nothing.

This scenario is possible if they have been converting significant amounts into USD as they would not only have to pay interest, but the appreciation of the L$ as well.

Also, there is the possibility that this is a ponzi scheme. I strongly advise anyone interested in investing in Ginko to read this link:

http://en.wikipedia.org/wiki/Ponzi

While I try to steer clear of making these sorts of comments about other people's work, I have to say that the large payout in interest and the lack of transparency motivate me speak out in this unique situation.

I am a bit saddened that the Lindens have not regulated this a bit more (ie, by requiring more transparency), because if it does implode it could cause massive distrust in a fledgeling economy.

The way it was explained to me was this.

"It takes money to make money, we borrow your money and use it to make some and give you a bit"

The inability to secure these accounts has more to do with SL than the intentions of the bankers.

Technically, LL could say "ok now we are going to trade peanuts for items, everyone get's 2 peanuts and all your Linden is void"

I too was initially apprehensive about Ginko. I'm still uneasy about the fact that they do not disclose what it is exactly they use the money for. However, they have been in existence for several months now, a long time for SL businesses. And while I do not have 1M in it, I have a sizeable chunk there, and have been able to withdraw large amounts with minimal fuss (they have to manually approve withdrawals greater than 50k).

There is no guarantee that real-life banks will turn go bankrupt either. However in RL, bank deposits are usually insured by the government. Ginko deposits, of course is not insured... more like investing in a mutual fund than depositing in a bank.

That being said the interest rate is really high. There is no investment vehicle I know of with that high of a return without a very high risk too. So despite their looking and acting very much like a bank, I really consider the money I have in Ginko a high risk investment.

My concern is also the lack of financial knowledge that exists in SL.

Sometimes you'll hear someone say they're making money off of Ginko and then they'll put some in.

And voila .. they make money, so, naturally, they think since they made money they will make more.

That absolutely does not hold true. Past performance does not guarantee future proceeds.

Yep. Unless they produce verifiable accounts showing where the cash has gone, my working assumption is that either it's a Ponzi scheme, or an exchange rate gamble, or they don't know what they're doing. Either way it'll end in tears. I wouldn't touch it.

It is a risk. Everythng in SL is a risk. You will never know what may happen next. My understanding is that they invest the money both in world and out of world. I know they used to do loans, not sure if that is still don or now, and use other money to fund other projects. I heard that a casino, some land deals, and other such things are used to generate the cash inflow. I am not sure is anything I just said is true, but I trust these sources. I would suggest to you that you only invest what you are willing to lose. If Ginko goes bust, the so is your money. Maybe a better plan is to invest part of your money there, and just hang onto the rest. They always say not to put all your eggs in one basket.

Just found this. I'm posting the reply sent to Frowning Shark.

"I'm the bank's founder and owner. We do have a disclaimer on the
website, and it is there to remind people that there are no guarantees
in the investment world. Bankrupcy however does not mean "the bank is
over and everybody lost all their money". It means we are iliquid,
that is, regardless of how much our assets are worth, we cannot pay
people's withdrawals within a reasonable timeframe, and therefore have
to start liquidating those assets, often at a discount, in order to
pay depositors. It is an unavoidable fact that in order to pay people
their interest, we must use the money productively, and in order to
use the money productively we need to tie it down into an investment.
Many bank liquidations in real life have been performed at full face
value (meaning people got all their money back) [It is true though, that such is not often the case, since bankrupcies are often triggered by legitimate fears that the bank has made bad investments or by a government action which triggers multiple bank runs, which makes selling bank assets for full value hard] in the past, and we do
our best to manage the money well enough so we never go bankrupt, much
less lose a significant part of depositors money. We own three sims
(including two casinos), and plan to expand to over a dozen sims soon.
That means not only are our investments (well part of them) clearly
visible, but LL has real life information on me, and I have no doubt
they would release that information if I ever tried something
dishonest. The money is not insured in any way and you are, of course,
making a business decision with inherent risk in it, just like every
other. I can't tell you if the reward is worth the risk, but if you do
decide to invest with us I would do my best to keep your money safely
generating a profit. We currently pay interest on L$13,000,000, so
another million wouldn't be a problem."

What is the question?
The plain and simple fact is that you do not have any legal right under any law to your Linden Dollars whether in your own character in SL or in the the hands of another character.
If Linden wants to destroy all the Ls in your account or kill you character off with all those Ls in it, there is nothing legally stopping them from doing so.

If you give your Ls to any player, there is nothing legally stopping them from shutting down their operation, and keeping your money. Moreoever, there is nothing stopping them from going down the drain and losing your money with or without any malicious intent.


There is nothing else to it. That is the risk involved. We all know this.
The Ginko sign makes this simple fact clear to anybody that might not be in their right mind. That is why they put it there.

Before I even saw Ginko for the first time, I already knew that it would never be worth it for me to put my Ls into a player-run bank. But I know friends that use Ginko, and are very happy with the results.

When I first saw that note on their machine, I felt that whoever created Ginko is very wise. It shows that they know what they are doing, and not deluding themselves like many businesses do. They seem to know the risk their customers take, and they let their customers know the risk as well.


The question you should be asking is whether the risk is worth the return.

What is the question?
The plain and simple fact is that you do not have any legal right under any law to your Linden Dollars whether in your own character in SL or in the the hands of another character.
If Linden wants to destroy all the Ls in your account or kill you character off with all those Ls in it, there is nothing legally stopping them from doing so.

If you give your Ls to any player, there is nothing legally stopping them from shutting down their operation, and keeping your money. Moreoever, there is nothing stopping them from going down the drain and losing your money with or without any malicious intent.


There is nothing else to it. That is the risk involved. We all know this.
The Ginko sign makes this simple fact clear to anybody that might not be in their right mind. That is why they put it there.

Before I even saw Ginko for the first time, I already knew that it would never be worth it for me to put my Ls into a player-run bank. But I know friends that use Ginko, and are very happy with the results.

When I first saw that note on their machine, I felt that whoever created Ginko is very wise. It shows that they know what they are doing, and not deluding themselves like many businesses do. They seem to know the risk their customers take, and they let their customers know the risk as well.


The question you should be asking is whether the risk is worth the return.



There is no need for this. In a free market, people should be able to do what they want. Linden stepping in to somehow require them to be more transparent is not fair to them. It is their right to do what they want as long as they are following the TOS. Their transperancy is and should be purely up to them.

If this is true, you could put some money in ginko as a hedge against L$ devaluation.

You all have much vaster knowledge than I. =P
I shall invest some money in the bank, but, as you say, as a high risk investment.

Thank you, guys.