The King is Dead

http://www.ginkofinancial.com



Announcement 08/08/07 10:20PM EDT
Dear accountholders,

Ginko Financial was established in December 2004 at a time when Second Life had less than 20,000 residents. As one of the strongest brands in Second Life we have seen the economy grow to many millions of residents and thousands choose Ginko Financial as their preferred financial services provider.

As you probably already know, Ginko Financial has experienced some challenges in these last couple of weeks. Following the ban on gambling in Second Life we began experiencing a wave of withdrawals from Ginko Financial. This led the funds we keep in reserve for day to day use to be exhausted, which evolved into a full blown panic depleting even our last line of cash reserves and resulting in the current situation, with about L$50,000,000 queued up for withdrawal. This situation is unsustainable, as we would be forced to sell off our assets at a significant discount in order to honor such withdrawals, thus severely harming Ginko Financial's long term prospects and it's ability to ultimately honor all of it's obligations to accountholders.

We had some hope that calm would return to the public and we could resume normal operation, but that does not seem to be likely or even possible anymore. Drastic steps have to be taken in order to protect YOUR wealth while giving an escape valve to anyone who is in panic or simply in need. We are not going to vanish and the investments we made still exist and will not be sold off.

After considerable thought, we have concluded that the only way forward from this is to convert, compulsorily, all customer deposits into a tradeable debt security called Ginko Perpetual Bonds. These bonds, listed on the World Stock Exchange (www.wselive.com), will allow Ginko Financial to recover from recent events by removing all pressure from our cash reserves while providing accountholders with a way to cash out on an open market.

All accountholders will have an account automatically created on the World Stock Exchange (www.wselive.com). Customers will receive one bond with a face value of L$1 for every L$1 they have deposited in Ginko Financial. Each Ginko Perpetual Bond will yield L$0.03 or 3% of face value per quarter (every three months). Ginko Financial will be actively purchasing these bonds in order to help keep prices at as high a level as possible.

Ginko Financial will bounce back from this and if you stick with us, you wll not lose anything. If you must sell the bonds, then you must sell, but I advise against accepting low prices.

Regards,
Nicholas Portocarrero / Andre Sanchez

also in case anyone was wondering posting a full quote of that is in the rules since it's an implicitly and expressly public announcement not to mention being web posted instead of posting in SL.

I wouldn't say the king is dead, just that he's fallen and he can't get up.

In other news, today's grid problems are blamed on a collective "I TOLD YOU SO!" said by the thousands who saw this coming a mile away, which was so loud it resulted in a 7.0 gridquake.

Waits for class action suits

actually I don't think even the fall of Ginko can cause massive issues at a RL colocation center.

Considering the contradictions that even LL admits in their stance that the L$ has no value but can be exchange for USD and thus must have value are tough enough to deal with legally, the fact that he who cannot be named due to LL rules and regs is in Brazil I doubt anything will happen.

I also dought people will easily give up that amount of money without a fight. I guess we will see what unfolds in the next few months. *puts on the popcorn*

I was hoping to wait this out and hope for the best, and I'm usually quite a patient and understanding person...
But this was the last straw.
Not that I can do anything about it....

You can get out while you still can, assuming he paid his promised dividends you might be able to make your money back eventually (a couple of years at least) from dividends or if/when the price rises to over 1.00 a share (your original investment) or you can dump it all now on the market and get 15 cents on the L dollar and be glad you got that much.

is that what they are selling for 15 cents?

So ts the same deal as when he was willing to sell $100L Bonds for 100L of deposits- when they were trading at 15L.

I believe that currently for every 1 L in ginko people got 1 bond with a face value of 1 L, so currently they're worth about 15% of face value, so to actually get the money that you invested worth you'd have to wait until it reached 1 .0, that's not taking dividends into account which lowers it slightly and over years negates that. I haven't done the exact math but it would be a matter of at least several years to get your 1L per bond back purely from interest.

Yup. he split them 1:100. to be generous i'd say he did it to make the math easier for the conversion.

Its Pure Speculation But,

I still have serious doubts most of the money did anything but go to Nick P.

He paid himself and his friends over 100k US he admits that.

and he used some money to finance a personal website of his - that was stated.

Since he was the fox guarding the henhouse he could decide how much that was worth spending on ..

He wont tell anyone where the majority of the money / the off world part went ..

I kinda think thats becuase it all went to things to benefit himself directly. He probably THOUGHT that personal website woudl take off.

So of course he cant really sell it for what its "worth" and thus pay off investors ..


-----
Otherwise all along he could have outlined his assets and Investors would have valued the company (and thus the bonds) as worth more.

so currently the amount you currently have left before you reach the amount you originally had in your account is:

your original balance - ((bond shares * value per share) + interest accrued so far)

Yeah but people were "making" higher Interest before this happened. Its more like hes got their money captive.

Well on paper.


What happens to all the qued Withdrawls?

There's no way to verify this anymore since everything is offline but my guess is that the queue got cleared and the money sent back before it got converted so anything you had in the queue was included in your statement, though again there's no way to really verify that at the moment.

Moneys gone he has a new house and a new car and possibly expanded his stamp collection

Also i think some guy calculated those bonds would take 8 years or something to give the 100L return or whatever

I think that was at the old rate of interest (which was higher than it is now) and the old rate of conversion which was 100 times less than it is now)

Tens of thousands in RL currency.......*poof?!*

I didn't realize this at the first reading of the ginkofinancial message, but the transfer to GBP hasn't happened yet. that's why they are still trading at $L0.15
can anyone confirm that's how they're reading the statement, too?

well its written in future tense but not sure if its meant to be that .. I suppose my guy with his 1L can go peak and see if he has a bond..

I can't quote the poster by name due to LL rules but this made me laugh, this is from an impromptu Q & A with Nick at the WSE headquarters

"You or someone else at ginko knows the basics of accounting right?"

what with all the "scandels" since friday its been umm interesting. I"m wondering what's going to blow up die or get sued next?

Somebody will kill Phillip Linden in the Rausch Sandbox with the revolver.