Archive for the 'Banking' Category

Second Life Financial News

November 26th, 2007 | Category: Banking, Second Life Money, Stock Exchanges, Taxes, Virtual Economy

From: Your 2nd Place Taxes……does that mean refunds? Quote from the site - You know I was sitting in the Emergency Room with my mom at hmmmm 3a.m. this morning….reading an August edition of Time magazine. Flipping through the pages I see, oh what do you know?….an article about Second Life….Second life and taxes…..I do not recall (famous last words) the dollar amount they say people made in Second Life……and if the government should tax those monies….well I for one hope they do!

From: Second Life Herald Midas Bank Insolvent - Trouble On The WSE Quote from the site - While there have been some concern about Midas Bank’s financials, no public signs of trouble occurred until November 2nd. Midas Commons released a notecard stating that an interest payment that was due on Hope Capital Bonds (HCB) was not paid. Midas reported having L$3.5 million invested in HCB. The Second Life Exchange Commission reports that L$650,000 was owed to Midas Bank as the interest payment on their HCB holdings.

From: Orient Lodge Commodity Trading, Coming to Second Life Quote from the site - Quanta was planning to set up a bank in Second Life where the deposits where backed by gold bullion at The Bullion Vault in Zurich. I’ve been interested in watching commodity trading coming into Second Life. I had a great discussion about this with Quanta when he first bought the land and I’ve been waiting for the next developments.

From: SLOz World Stock Exchange facing legal problems? Quote from the site - The Second Life Herald are running a story on the Midas Bank saga, alleging that Midas have done some legal investigations around their issues with the World Stock Exchange, run by Australian Luke Connell (LukeConnell Vandeverre).

From: Looker Lumet New Second Life “SLURRENCY EXCHANGE” to offer best rates, preferred programs. Quote from the site - Virtual world developer Simuality.com announced their new ventureinto the world of Second Life currency exchanges, with the openingof the SLURRENCY EXCHANGE,whose main office is located on theSimuality island

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Discuss Second Life Financial Issues

November 10th, 2007 | Category: Banking, Discussion, Finance

What: Discussing Banking and Other Financial Issues in Second Life

When: At 1 p.m. SLT on Saturday, 10 November 2007

Where: Pandoria (16,157,23) in Second Life

Description: Nobody Fugazi will be talking about the Second Life banking industry as a guest on Sophrosyne’s Salon. I will be caffeinated, prepared, and will deal with hecklers with extreme amusement.

But seriously - the issue of banking within Second Life is a very real issue, especially with the events over the last 4 months.

If you’re interested in banking and related issues within Second Life, stop in. It promises to be an interesting bit of time where people can listen to some thoughts and ideas - and come to terms with some of the realities.

Second Life URL.

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Another WSE Scandal?

It looks like the WSE is in the spotlight again, and not in a good way, again. From the sounds of it, the WSE has defaulted on a scheduled payment of the Hope Capital Bond (WSE: HCB), this payment was worth about L$650,000 of income and Midas Bank had upwards of L$3.5 million invested in the HCB, and relies on the bond payment to fund the depositor’s reserve.

Ancapistan Capital Exchange (AnCapEx) Chairman IntLibber Brautigan agreed with a statement by Midas Commons in which a boycott of the WSE was proposed until it made good on its bond payment.

“LukeConell is not a fraud or theft master,” said Smithers Daviau, a representative of the WSE present at today’s gathering. Aside from statements and excuses from Smithers and one other WSE employee, however, regard for Second Life’s oldest and arguably most opaque securities exchange was not so positive.

Commons further reported that the bank currently had around L$8 million on deposit, and a total loss of value in its HCB holdings would represent a loss of about L$5 million – and unavoidable bankruptcy for the financial institution. Source: Updated: Midas Bank in limbo; Commons and Brautigan call for boycott of WSE

From a statement on the WSE website, they say they are not responsible for the financial decisions of the Midas Bank and that the management team if fully responsible. They have delisted the following Midas Group of companies to ensure that shareholders will have the best possible chance to earn a return on their investments through capital growth and dividends using the WSE Traders Fund.

Midas Commons, CEO of Midas Bank yesterday informed the World Stock Exchange that the Midas Group of Companies are bankrupt.

The WSE accounts controlled by Midas Commons were locked while we reviewed the situation.

The cause of this bankruptcy is not our concern as the WSE is not responsible for the decisions and actions of Midas Group and its management. Midas Group and its management team are responsible for all the financial and operational decisions.

The WSE has believes that the Midas Group of Companies were Over-Leveraged and did not hold sufficient cash reserves to allow for the potential risks and impact of increased customer withdrawals, lower than expected earnings from investments along with regulatory and economic challenges. Source: Bankruptcy of Midas Group

I agree completely with Lowell Cremorne of SLOz and have asked the same question myself during the Ginko Financials fiasco.

What this latest drama reinforces is the fundamental problem with the unregulated financial system in SL - why would any serious investor look at a system where there’s no regulation and multiple stock exchanges that publicly criticize each other’s viability? One of the main value propositions of Second Life is its freedom, but this is one area where too much freedom may be one of the virtual world’s major pitfalls. Source: World Stock Exchange - the latest controversy

More coverage:

WSE announces Midas Group are bankrupt The full statement (below the fold) makes interesting reading in one paragraph saying “the reasons are not our concern” and in the next explaining why they think the bank went under. Nothing to do with late payments from their own bonds of course. The value of the various Midas Group bonds have been transferred to the WTF rescue scheme, straining it yet further.

Midas Bank the next… Looks like it is 5 to 12 to get all funds out of SL. There is no more trust left in any bank or investment….sadly I think it would be better if one starts to legally track down these individuals in RL and get that continued fraud resolved once and forever.

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Ginko Financials CEO Hits the Door

There has been so much transferring and bullshit going on with Ginko Financials, I don’t even know where to begin anymore to try to explain what happened. The most recent activity has seen the CEO say he can’t make the interest payments anymore, and he has transferred everything to the aptly named WTF, or WSE Traders Fund, and is washing his hands of it.

I also thought I could do partial liquidations and use the money to lower our debt proportionally. However, first with the ban on buying bonds for less than the face value and later with the gradual erosion of our investments, both of these things ceased to be possible and my position became even weaker than it was when I created the bonds. The
fact is, there is no way for me to meet this quarter’s interest payment. Neither of our main in-world investments got off the ground (BNT and HCL), though they may still do so sometime in the future. The stocks are too weak to be sold to help meet this quarter’s interest payment. The L$2,400,000 we have inside Allenvest, despite Allen’s lie about me having withdrawn everything, are locked and probably lost forever.

The situation is such that I am left with no choice here. The bonds need
to be converted to a fund, which will hold these assets. Namely, the WSE Traders Fund (WTF) already listed on the WSE. Interest payments are no longer part of the equation and as I am transferring the assets to Luke, I will no longer be involved with anything regarding Ginko Financial as it will no longer exist. Assets previously held by Ginko Financial are being
transferred to the WTF. Source: Ginko Perpetual Bonds Important Announcement

The SLNN in an aptly titled article, Ginko CEO Escapes, I say aptly named because it is in a folder called bank robber, check the url when you get there.

Today, Ginko Bank CEO Nicholas Portocarrero posted a statement on the World Stock Exchange Web site saying he will not be paying any interest on bonds, allowing himself a back door to escape with $750,000 USD.

But Saturday, Portocarrero said he could not pay interest on the bonds and pinned partial blame on actions taken by banker Investor Allen, and the weak face value of his bonds. Source: Ginko CEO Escapes!

There is still a little bit of hope however, as Shaun Altman, majority bondholder of Ginko Perpetual Bonds (GPB) is taking it upon himself to see to the equitable liquidation of GPB’s current asset’s and to the timely compensation of all bondholders.

I will be charging nothing for my liquidation trust service. I believe that GPB bondholders have been through enough at this point, and have a right to recover as much as they can from this fiasco. Being the person with the most GPB bonds, as well as a neutral third party to asset holders, makes me the right person to handle this liquidation. The ball is already rolling, so I ask that all bondholders recognize this, and recognize that I am working in all of our best interest. I hope that it makes you happy to know that someone is finally working in YOUR best interest for the first time in a long time. I hope that I will be able to recover a sizable portion of GPB’s assets for distribution to all of us, but I can’t make any promises. Source: Ginko Perpetual Bond Liquidation Plan

Check that post for the exact way he plans to carry out the liquidation and distribution of the GPB assets. Let his be a lesson for everyone, if the bank is not backed by money to start with, then you are gambling with your lindens and we know how the Lindens feel about gambling.

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MetaCard, Credit Cards for your Second Life

September 05th, 2007 | Category: Banking, Credit Cards, Debit Cards

We mentioned before that there is a debit card for Second Life coming our way in 2008, now there is going to be a credit card as well. FirstMeta is launching the MetaCard, so, just like rl, you can run up a bunch of bills in sl. To get the Gold Card, you have to give them a rl credit card number, don’t worry, it’s not charged unless you default, it says, the Standard card just requires a valid mobile phone number. Hmm, I’m thinking text spam, but I guess we will find out soon enough.

The big difference I see is the percentage rate is called DPR, daily percentage rate, where, rl credit cards use APR, annual percentage rate. Over on the Techcrunch site, some of the commenters said this works out to about 60.7% annual for the 0.13% daily and 72.9% annual for the 0.15% daily rate. Wow. High rates on rl cards are around the 20% range, or at least when I last checked, so those are some high rates. Plus, you have a monthly fee unless you spent so many Lindens every month, the fee is L$300 lindens unless you spend over L$500 lindens per month, I believe. If you sign up now as a merchant, you will get the fees for the first six months waived. Those are some high rates, but there will probably be some takers, but it is good to see a bank that will actually be able to make some money and not just blow smoke up our avatars like Ginko did. Where the Second Life stock exchanges have said it’s just a game, FirstMeta is making you back up the account, at least on the Gold card, so it is tied to real world money, and the high fees should make them a few Linden while they are at it.

The MetaCard is a L$-credit card that you can charge your Second Life purchases to. Buy what you want now and pay for it later. Better still, pay us back in L$.

With the MetaCard, you can…

Increase your spending ability You never have to worry about running out of L$
Enjoy a better shopping experience No more “You need more currency” pop-ups
Enjoy greater value With our MetaRewards program, get reward points for shopping with your card

Get instant L$ Get “cash” whenever you need it
Grow your L$ Earn interest on your free MetaSavings deposit account
Be entitled to special privileges Special promotions when you shop at your favorite Second Life merchants…only for you
Have peace of mind A team of professionals working to serve you around the clock

Instead of paying L$ “cash” upfront, charge your purchases to the MetaCard. Simply right-click on the item you want and select ‘MetaCard’.

You get the item immediately. No L$ is deducted from your account.

At the end of each billing cycle, you’ll receive a statement showing how much you’ve charged to your MetaCard and the minimum payment required.

You can choose to pay off the entire bill at once or pay it off over time. Payments can be done at any of our many ATMs in-world. Interest accrues only on rolled-over balances. Source: FirstMeta

Here is how they will compute the finance charges.

Calculation of average daily balance including new purchases: Assume previous balance is $400. On the 15th of the billing cycle the customer makes a payment of $300, and on the 18th he makes a purchase of $50. The ending balance is $400 - $300 + $50 = $150. The average daily balance is: (($400 x 15 days) + ($100 x 3 days) + ($150 x 12 days)) / 30 days = $270. The monthly interest rate is applied on $270 to determine the finance charge.

From Techcrunch,

MetaCard comes in two flavors: Basic and Gold. The Basic card is subject to a avatar check and provides a credit limit of L$5000 ($18.60) per month. A Gold MetaCard offers a credit limit of L$10,000 ($37.20) per month and can only be obtained by providing real world credentials and a real life credit card for automatic payments. Interest is charged at between 0.13% and 0.15% per day, which would we roughly 54% per annum, but compounding. Payments are 2% of the total amount used plus fees outstanding at the end of the month, and users have 21 days to make their monthly payment. MetaCard holders must also spend L$500 ($1.86) per month or face a monthly maintenance fee of L$300 ($1.12). Source: MetaCard: The World’s First Virtual World Credit Card

I would get one of these just to have it, but they charge the monthly fee so I will probably skip it and wait for the debit card.

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Mizuho Bank to Launch in Second Life

August 28th, 2007 | Category: Banking

The Japanese bank, Mizuho, will launch a Ferris wheel(?) in Second Life, as a new way to promote its services. The Mizuho Financial Group Inc will be the first major Japanese bank to launch in Second Life, if you really want to call this a launch. Avatars can ride the Ferris wheel once the answer some questions about the banks services and products. Which brings up a couple questions, will it be in Japanese only, and why a Ferris wheel? What is the connection?

A Mizuho bank representative said they are considering connecting Second Life to it’s Internet banking system, which is good news certainly, as we would finally have a bank backed by something other than some anonymous avatars word.

No date as to when any of this will happen was listed on the announcement.

From Japan corp

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Financial News

August 25th, 2007 | Category: Banking, Investing

Weekend sales, SLCC edition
Three bargains you need to know about, even if you’re hanging around the SLCC hotel in Chicago!

Jolie Lumiere of Jolie’s Boutique is having a big sale through September 4th to raise money for medical expenses. Whether or not you’re feeling especially charitable, half off is half off, and Jolie makes some really fabulous items — everything from gowns to lingerie.

Regulating Second Life The recent run on Second Life’s Ginko bank, one of the virtual world’s financial institutions, has prompted many residents to ponder whether their magical play land might not need some regulations after all. Their fears aren’t fueled by lewd acts or incessant griefer attacks. Rather, they’re about the one thing that truly matters: money. CFO magazine recently looked into the bank’s failure as evidence that some form of outside oversight is needed to guard against fraud, money laundering, tax evasion, and incidents like Ginko and the recent theft from the World Stock Exchange. An excellent suggestion. But the article fails to deliver on its promise.

IBM Employees Might Strike…In Second Life The Rappresentanza Sindacale Unitaria IBM Vimercate (RSU), the official trade union representing IBM’s 9,000 workers in Italy, is planning a strike to protest the fact that IBM is raking it in and none of it is being passed down to the employees in Italy.

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Business and Finance News about Second Life

August 22nd, 2007 | Category: Banking, Business, Investing, Stock Exchanges

Dutch research shows strategic advantage for businesses Recent research of the University of Utrecht on why companies establish in virtual worlds showed that Dutch companies feel they have a strategic advantage on competitors. Also they find themselves innovative and feel it gives them a better insight in the behavior and preferences of tomorrow’s customers.

The L$150,000 lindens that were taken by Jasper Tizzy, of the Atlas Venture Capital (AVC), has been returned, at least according to a comment from Cocky Dagger on this ISE press release.

cocky dagger
The issue with the money has been resolved. Jasper has paid the money that was deposited by the ISE.

Second Life Developer Out sources Accounting Linden Labs, creator of the online virtual world Second Life, has begun outsourcing its finance and accounting work to Consero Global Solutions.

Linden expects to save over $1 million over the next three years from the arrangement. The company’s Second Life online world has attracted more than 8 million registered users in 100 countries.

Virtual speakeasies defy Second Life gambling ban Last month, Linden Lab banned gambling in Second Life, bringing a thriving casino industry to an abrupt end. But while the old casinos have shut down, a vast network of illicit speakeasies have sprung up in their place, providing gamblers with new places to play.

Poker players in Second Life say anyone looking for a game can easily find one.

In Reality, Virtual Marketplace Falls Short The virtual world of Second Life is taking a media beating. What was recently touted as the next great frontier for advertisers and tech-savvy companies is now experiencing a backlash of negative feedback. For every successful company in Second Life, there seems to be countless others abandoning the virtual world in favor of other, more controllable worlds.

Cyber Boom With just the click of a mouse, virtual land barons are making a small fortune in real-world money. David Adams reports.

The new gold rush is on, but it’s no longer to the hills of Ballarat or California that people are flocking. Instead, it’s to the new frontiers of virtual cyberspace worlds where people are heading in their droves, eager to be among the first to snag themselves some land and set up shop.

What Second Life business exodus? Earlier in the summer, Second Life took several hits in the mainstream business press, which just last year was ga-ga over the virtual world and the potential for business activities. Pointing to negative articles in Forbes and Fortune, I concluded that “the honeymoon is over.”

A few readers agreed. One, identifying herself has “Shannon,” proclaimed that the “Second Life bubble has burst,” and described what she said was her own company’s experience.

People Don’t Like Marketing and Advertising Yeah, I know, if you’re here wondering what kind of obvious headline that is, you’re in the choir. I’m just translating.

When John Connell mentions this bit of Wired’s vanilla reinvention of what was predicted, I had to chuckle. People have shouted, they have screamed, and given the opportunity they will avoid marketing and advertising unless they like the product enough to get past the gimmicks.

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Atlas Venture Capital Selling MasterCard Debit Cards

August 21st, 2007 | Category: Banking, Credit Cards, Debit Cards, Doing Business in SL

I mentioned yesterday over on the Grid Live that Perfect Card will be offering a Second Life Debit Card, well, it looks like that might not be the only one available.

08.17.07 - “The Bank” Now Selling MasterCard

The bank has now deployed new ATM machines in all bank locations. The new ATM machines will now allow you to buy a MasterCard Debit Card. This is a real life MasterCard, that you can use anywhere MasterCard is accepted worldwide.

The cards are sold with some pre loaded USD funds on the card. The options are $10, $20, $50 and $100 USD. The cards can be re-loaded with L$ from any of The Bank ATM machines. The L$ will be converted to USD at the posted daily exchange rates.

After all costs and postage for the card, Atlas Venture Capital expects to see 3000 L$ per card profit. This income will be used to cover some operational expenses, then the balance will be issued as a dividend to all active AVC shareholders.

Our goal is to sell 1,000 cards in the next 2 weeks. Then over the month of sept we hope to sell 10,000 more cards.

We hope to earn over 30 million L$ in the next 30 days, with this new program. Source: 08.17.07 - “The Bank” Now Selling MasterCard

Wow, they expect to earn of over 30 million lindens? I guess they expect most avatars in Second Life have no idea of all of the troubles with finance that have been occurring lately, and that may well be true. I will buy one just to see what it looks like and how it goes, but I doubt I use it to buy anything more than getting my 10 bucks back.

Someone needs to tell these people to spell check their press releases before posting.

Added: Just saw this linked to on Your 2nd Place, AVC had just recently acquired The Bank, referred to in the above story, and this article adds a little to the story.

The Bank is also announcing a new and innovative service to The Bank customers. World Wide Connect, owned by Lonnie Dagger, has also been purchased by Atlas Venture Capital to provide a MasterCard debit card service to all of The Bank customers. This card will enable people to deposit money into their debit accounts which can then be used with a real life MasterCard to buy lunch, or whatever else they desire, in the real world. There will be no transactions fees for this service, which is bonded by Lloyds of London. This is a first for Second Life and will really change the face of banking in the metaverse.

“These two acquisitions for Atlas Venture Capital will make the Bank a market leader in the finance community. No one else has tried to implement such a service to SL residents before, and it opens the door to an increased cross over between SL and real life, offering an additional portal for the withdrawal and deposit of funds into and from hard cash,” say Jasper Tizzy, CEO of Atlas Venture Capital. Source: Atlas Venture Capital acquires “The Bank”

Nobody Fugazi has sent a question asking Lloyds of London if they are indeed bonding this debit card for them, if so, it would certainly change my opinion of whether this card will be usable for me or not.

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Techcrunch on Second Life Stock Exchanges

August 20th, 2007 | Category: Banking, Investing, Stock Exchanges

Following the ban on gambling in Second Life, Duncan Riley of Techcrunch decided to see if you could make money in SL by investing in one of the Stock Exchanges, he picked the WSE, probably because it was the biggest and most known. I would’ve liked to see him try his hand at all of them, but, any lights that get shined on some of the possible money scams in Second Life is good enough for me. He mentions the world of share trading is regarded by some s even worse than gambling, but doesn’t mention whether this is a real life or Second Life conclusion.

The World Stock Exchange (WSE) sits on its own Second Life island in a shiny multi-story edifice that just says money.

The trading floor on the third floor presents an initial lobby that includes an ATM machine (players must deposit money to trade stocks), rule boards and advertising for a bank that offers 15.75% PA. Walking through the lobby players are presented with a lounge area and customer service desks. There is usually a WSE representative on hand to assist with inquiries.

Can You Make Money Though?

There is only one way to find out. After perusing the 30 odd listed companies I made a number of investments which I may revisit at TechCrunch in the future to report on how they went.

For my opening portfolio I bought companies that sounded like they had substance. Hope Capital Limited (HCL) sounded hopeful, and as this is the holding company for the WSE you’d expect good results. Hype String (HYP) may not make string, but hype always rises, right? I expect Spontaneous Rich Investments, Inc. (SRI) to perform well. Ginko Perpetual Bonds (GPB) are all that remains of the funds from the collapsed Ginko Bank. After trading as high as L$26, today’s price of around $L0.19 makes them a steal. For good measure I rounded out my portfolio with the two IPO’s scheduled for August 20, Taft Worsley Enterprise (TWE) and Apez Corp (APZ). I have no idea what either do, but given the history of IPO’s in such markets, I’m confident of a strong performance. More in a week or so, unless of course I’ve made so much money that I’ve retired. Source: Betting On Second Life Stock Exchanges

He even created a video of his visit to the WSE. At least a bunch of armed guards didn’t show up this time to keep the peace. ;) I bet the GPB at L$0.19 a bond will still loose him money, any takers?

Posted to Technology Videos by eubeenhadd on August 20, 2007

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Second Life Debit Card

August 20th, 2007 | Category: Banking, Credit Cards, Debit Cards

Looks like a debit card is in the works for Second Life, the company behind it, Perfect Card, envisions you being able to use it in world and in real life. They say they just need to get the security stepped up, and if they are talking about banking in Second Life, that certainly is the case, and they believe this can open up doors for them that most places cannot. They are planning on releasing the card by Christmas of 2008.

Perfect Card currently provides debit cards for corporate customers like Dell and AOL Broadband implementing reward schemes for employees as well as serving the Richmond Shopping Centre and the forthcoming Quays shopping centre in Newry.
“At the moment we have an office in Second Life but we realized that while we have a real world product for gifts we are looking at transferring that into the virtual world whereby someone who is given a card as a gift can convert this into Linden Dollars,” explained Perfect Card’s Nikki Evans.
Perfect Card, which has been in business for two years now, provides debit cards on the back of the MasterCard platform and is actively looking at breaking into new markets and new countries.
“Already people can use our cards to buy goods online,” Evans continued. “We realized that setting up a direct physical sales channel in each country would take years so we looked at Second Life and realized a virtual version would give us access to an audience of 8.5 million people.” Source: Dublin company creating debit card for Second Life

Maybe once they settle on a security platform they can offer it to some of the homegrown banks in Second Life.

Popularity: 6%

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Lindens Say Skip the Banks in Second Life

August 15th, 2007 | Category: Banking, Scam, Stock Exchanges

In a post from Zee Linden today, the Lindens try to once again state that they have no plans to regulate Second Life banks, and that if it seems to good to be true, like Ginko Financial was, then it probably is. Until some regulations on banking and the stock exchanges are put into place that can hold people accountable for theft, fraud, etc, then I would keep my lindens in my virtual pocket, or transfer some out occasionally so too much doesn’t build up. If you put it in a bank, you are on your own as far as they are concerned.

It is important here to distinguish between real-world banks and the “virtual banking” services that some people are trying to develop in Second Life. From a simple perspective, banks exist in the real world so you have a place more convenient than your mattress in which to store your cash. Banks in the real world attract capital by offering to pay an interest rate. They then turn around and try to lend that capital to worthy borrowers earning money on the spread between the interest they pay and the interest they earn. Because Linden Lab holds everyone’s L$ as a database entry in each account, virtual banks don’t offer a superior “storage” alternative.

Probably the most important point is that real-world banks are regulated by real-world laws. Linden Lab does not intend to recreate or subvert real-world laws in any way. We are not aware of any institutions in Second Life that are insured by the Federal Deposit Insurance Corporation or similar governmental agencies in other countries. We caution our residents to be wary of anyone offering extremely high interest rates at no risk, either in the real world or in Second Life — if it sounds too good to be true, it probably is. Source: The Second Life Economy

He also discusses the Linden, the Second Life virtual economy and inflation, and some of the sinks they use to drain some lindens back out. (i.e. how we pay for our stuff in-world).

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