Linden Lab Official:Policy regarding inworld banks

Please read this if you operate, or have transferred L$ to, an inworld “bank” or financial company. As of January 22, 2008, it is prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy. Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several inworld “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized. Usually, we don’t step in the middle of Resident-to-Resident conduct â€" letting Residents decide how to act, live, or play in Second Life, but these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse â€" leaving upset depositors with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy. At least as important, the legal and regulatory framework of these non-chartered, unregistered banks is unclear, i.e., what their duties are when they offer “interest” or “investments.” There is no workable alternative. The so-called banks are not operated, overseen or insured by Linden Lab, nor can we predict which will fail or when. Linden Lab isn’t, and can’t start acting as, a banking regulator. Some may argue that Residents who deposit L$ with these “banks” must know they’re assuming a big risk â€" the high interest rates promised aren’t guaranteed, and the banks aren’t overseen by Linden Lab or anyone else. That may be true, but for all of the other reasons we’ve set out above, we can’t let this activity continue. Thus, as we did in the past with gambling, as of January 22, 2008 we will begin removing any virtual ATMs or other objects that facilitate the operation or facilitation of inworld “banking,” i.e., the offering of interest or a rate of return on L$ invested or deposited. We may sanction those who continue to offer these services with suspension, termination of accounts, and loss of land. We will not apply this policy to companies who submit a registration statement, charter, or other applicable license from a governing regulatory authority, or who are merely conducting marketing or education, but not accepting payments. You may report a violation of this policy through the Help/Report Abuse feature in your Second Life viewer, and follow the instructions given.