Second Life Investment Bank runs with money or taken by LL?

There is a bank in SL named Second Life Investment Bank. A couple of weeks ago the bank closed, the ATM was down and there was no info from the CEO. A while later the CEO told people that someone with stolen L$ had deposited those L$ in the bank and then LL came along and took 150% of the stolen amount from the bank (not the person who stole the L$). The deposit was large and so when LL took 150% it bankrupted the bank. That is what the CEO says, although it can not be verified. The CEO is pretty much MIA these days, but from what I hear, another brand new bank is now being opened with an all new name which will cover the losses, but it won't be open for a few weeks and is being run by a totally different CEO and company.

This seems odd to me. I know LL states in their TOS that they can take any and all L$ from your avatar at anytime for any or no reason, but why would they do this to this bank? Isn't the 150% take back threat reserved for those partaking in the scam? Does this mean that if someone uses a stolen credit card, buys L$ and buys something from me for say 10kL$, LL will then come along and take 15kL$ from me? Is this even true? Thanks!

Isnt this the same bank that one of the managers came on and claimed they made their interest by "Land Improvement"

Desmond might remember?

Sounds fishy to me too Pan - sounds exactly the thing someone would say if they were folding up a Ponzi scheme.

Then again it could be true - adding ANOTHER reason not to trust SL "banks".

Any SL bank or investment deal has a high probability of being a ponzi scheme. Putting your money into such things in SL is very unwise and no one should be surprised when they take the money and run.

If you didn't use a reputable exchange (LindeX, SLex, not sure what the others are), then there is a very real chance that you'll end up with no money and up to 150% less L$ than you intiially purchased, along with possibly loosing your account altogether for engaging in fraud.

Note that it's the actually buying L$ that is subject to the RISK API, not in-world transactions. I don't think there is any actual policy on how LL handles in-world transactions that happen with fraudulantly obtained L$.

http://secondlife.com/developers/api/risk.php


You'll never know whether that actually happened, or whether the owner of the "bank" is just using it as an excuse to keep all the money and ran off with it.

Tp to a random sim and ask the first avie you see whether they'll give your money back later if you give them some money right now. Giving money to an SL "bank" is no different.

From LL's pov, it isn't a bank, it is just another player.

And that player may well say that he isn't involved in that bad money trading LL accused the 3rd party of, but how do you know he isn't? It's not as if he is registered in some RL banking association.

Was it this?

/327/87/177130/1.html

I honestly don't keep track of these things very well - that could be someone different as far as I know.

only trust ur rl bank

Yes, I understand that if I buy L$ from some unknown source which does not use the risk API, like if I buy from eBay, etc. that if the L$ were obtained fraudulently by the person I am buying it from, I could have the L$ taken back or even 150% of it. But from the story the CEO told his clients before he left, LL came and took the L$ plus 50% more from him although he was not even the one who bought the L$ in the first place. He said that someone else obtained the L$ fraudulently, deposited it in the CEO's bank and then LL came along and took the money from the bank plus 50%. The deposit was very large and so when LL took not only the deposit back but also another 50%, it bankrupted the bank. Why would LL do this to the bank/CEO unless they felt it/he was involved? Or maybe the CEO did something stupid like bought L$ from eBay, got it taken plus 50% more by LL and tried to blame his stupidity on someone depositing in his bank. heh. Guess we'll never really know.

My main issue is: If someone obtains L$ fraudulently and then gives me the L$ or buys one of my products, will LL come along and take it back from me plus 50%? That would suck and would be in no way my fault. LOL.

Thanks!

No, that's another "bank".

Yeah that was it .. seems like a different name.

Youd think Linden Labs would crack down on Ponzi schemes .. really .. they are more illegal than SL gambling (least for now) , but then they might have to admit the Linden $ has value, which im sure they dont want to do.

But you would think they would atleast make them use different names:

Names Like-

Linden Bank
SL Bank
Second Life Investment Bank

Makes it sound like its Endorsed by the Lindens. Which I am sure is intentional.

Yea, but who is to say what is a ponzi or not and how would they know? Also, businesses in SL have been naming themselves "Second Life This" and "SL That" since the beginning. It is done in the real world as well. Bank of America, Chicago Pizzeria, etc. As long as they make it clear that they are not owned or operated by LL, I'd think it should be fine.

I'm not worried about the whole "banks in SL are Ponzis!!" issue as that has been talked about a million times before. I'm worried about this "take 150% from the people who the L$ are passed onto later rather than the original scammers." Couldn't the 150% rule be gammed as a kind of grief? I don’t like John Smith's company, so I steal L$ with a stolen credit card, hand the 2 million to him and watch as LL takes 3 million from him. LOL. Weird. And I wanted to know what people thought about the CEO's excuse?

Thanks!

Actually I'm very glad the risk API is in place.

Just imagine if someone were to try to launder money through you.

Stolen money is returned to the proper owner when it's recovered, and innocent people caught up in the laundering don't keep it - it's simply another theft by the criminal, perpetrated downstream on innocent businesses.

Imagine getting a few sims for someone, only to find out that their money wasn't really theirs, it all gets pulled back and now the charges are 100% on YOU... wow.

I appreciate every fraud protection they have.

I would take this 150% thing with a grain of salt.

It's something that would make no sense for the Company to do intentionally.

"Let's strike irrational fear into the hearts of all SL merchants for the price of lunch at McDonald's..." Nah. I'm not buying it.

Yea, def so. But if they want to start taking 150% from people, they should restrict the buying and selling of L$ to API approved sites ONLY. It would make me feel safer about not having someone hand me stolen L$ and then having 150% of it taken from me by LL. But then again, the CEO in my OP could have just been lying and maybe this never happened and he just ran off with the money.

Yea, I'd think that LL would only do this if they were sure the person was involved in the stealing. I hope.

They are all Ponzi

Some might be unintentionally Ponzi and not even know it themselves.

But they are all Ponzi.

Theres no way for them not to be - what the heck are they investing in to pay these high Interest rates? What Account protections agaisnts losses do the Lindens Offer.

None are banks at all. In the US, IRL you arent even allowed to call yourself a bank without meeting required regulations. Even a Savings and Loan or a Credit Union - which has less regulations is still regulated.

There are very specific rules abotu places that hold your money becuase its dangerous to leave that industry unregulated.

Even the stock market is regulated. Ask Ivan Boesky.

What you are stating above is an all-or-nothing-fallacy. You are saying that because some banks pay out mega high interest rates and don't tell you any information, that then all banks in SL are ponzis? That doesn't make any sense to me. I have seen a bank in SL which pays rates of which I could see them covering. They also tell you who they are in real life, their background and what they invest in. When I do the math, I could defiantly see them covering their rate. Now granted, that is only one bank, but still, by saying that every investment fund/bank in SL is a ponzi, is kind of extreme, isn't it?

In the US there are no restrictions on calling yourself a "bank." There is a night club down the street from me named "The Bank." There are some restrictions on certain kinds of investments, but those restrictions and regulations vary greatly from fund to fund. A savings and loan may have may restrictions if they wish to be FDIC insured. They don't have to be FDIC insured, and if they are not, they have fewer restrictions. Hedge Funds have almost no oversight or regulations. There are also MANY banks in developing countries, etc (like SL's developing economy) which have no regulations what so ever and are still called "banks."

There were stories last December about someone using a stolen credit card to buy large amounts of L$ and putting the money in a sploder. Many people who collected from the tainted sploder had their accounts disabled. It was from the people who had their accounts disabled that the stories came. LL doesn't seem to care when tracking stolen L$ as all who come in contact with it get burned. The perpetrators of CC fraud get banned from SL and if the disabled accounts pay the 150% penality they get reactivated.

Hi Svar, how are you Long time no see.

That just seems messed up to me. The banning of the account which used the stolen credit card is a no brainer, but others which may come in contact with the money later should at the MOST have 100% of the stolen L$ taken back. This 150% rule for anyone who comes in contact with the L$ boggles my mind and is yet another reason to not invest much in Second Life. And I don't mean just banks; I mean the economy as a whole. This is scary stuff to me.

It's not very likely that it's a false statement. There are only so many ways to make money in SL, and investment isn't one of them. Land speculation is pretty much all there is along those lines and it can't generate enough revenue to pay the interest rates being paid by some of these SL "banks." It's close to a certainty that they are using the money from new deposits to pay the interest on older ones, unless some crazy person is paying it out of their own pocket. A scheme like that simply isn't sustainable and will eventually collapse under its own weight or vanish overnight.

Actually there is a Legal definition of a Bank in the US.

The following supports what I learned in College about the establishment of strict Banking regulations following the Bank run that resulted from the Stock Market Crash of 1929.

A savings and loan can not just start calling itself a Bank and neither can a credit union. Im pretty sure you can not call yourself a Bank if you just start taking money and opening accounts. You can probably have a Night Club called "The Bank" as long it was clear you were a Night Club. But you cant have a Bank called "Night Club" without meeting federal guidelines.

By this definition, there are no banks in Second Life.

What there are is investments that call themselves banks. Every investment that im aware of is a Ponzi scheme propped up by users who leave SL without cashing out. If there was a run on these "Banks" they would all tank.

Maybe I was a BIT too quick to call ALL banks Ponzi schemes. Some "BANKERS" in Second Life are Loan Sharks instead.

Admirable

I guess that would depend on which bank you are talking about. The bank I use tells me how they make their money, they meet people in real life, they disclose their investments and even have pictures of themselves on their website, addresses, backgrounds, accounting. If you do the math, they could defiantly cover their rates, although their rates are a good deal lower than most of the "anonymous mystery banks" which are typical in SL.

Oh well, the whole ponzi issue has been talked about a million times. Let’s not even get back into that. I am interested in the 150% take back policy of LL.

Well, like I said I think many dont know they are Ponzi schemes - therefore why would they worry about their RL identities? They dont think they are doing anything wrong.

Additionally - a Ponzi scheme might not be illegal in Second Life becuase Linden Labs steadfastly holds that the Linden dollar has Zero value, and is only a Virtual medium caleld currency in a game.

Works for protecting them when Residents run gambling (possibly)
Works for protecting them when Residents run shady investments (possibly)

Well I dont see how this even passes the basic logic test.

If Person A buys stolen money and gives it to Person B. They might take the money Person A gave to Person B, but the penalty amount will have to come from Person A's account.

Unless the Lindens can prove Person A and Person B are in cahoots together in some way.

My guess is the "banker" either used this as a way to fold up and take the money.

OR he was involved in moving around stolen Linden $ and the Lindens found out about it.

Maybe the Lindens dont follow this simple logic. But like Desmond said if they didnt it would be bad business.

How could someone run a Ponzi and not know it? The definition of being a Ponzi is "Paying out withdraws with new deposits while making little to no investments." So, if you were purposely paying out withdraws with new deposits, then yes, they would be a Ponzi, but they would know it. If their bank was in the red and going deeper into the red and they didn’t disclose this and kept propping the bank up with new deposits, this also could be considered a Ponzi, but they would again know it. The bank I use has a profit margin of over 20%. If they have more money on hand than what they owe and are continuing to make more, that would not be a Ponzi. If they were failing and disclosed that they were failing, but still took deposits, that wouldn’t be a Ponzi, it would be someone looking for venture capital.