Effective January 22nd 2008, Linden Lab will be “banning” SL banks through their new policy as posted here : New Policy Regarding In-World Banks
This policy will not directly affect virtualSecond, nor the continuing of the SoulManager sim. Truth be said, we have considerable deposits made at various SL banks, which may or may not be fully recoverable, but we don’t reply on these deposits to operate the sim or in SL.
The ATM’s at the Sim Information Point will remain on site for the time being, as we’d like to give all residents the chance to withdraw their funds if they like to do so, and providing the institution is able to support the withdrawal. No one will be getting any better from a bank run. I’ve been in SL for over a year now and I’ve seen “banks” come and go, close up shop, run off with funds, or exit gracefully.
Please contact the designated contact of your SL bank to hear what they are doing and how they are working towards complying with the new policy, or how they will be refunding deposits. Residents of the SoulManager sim that are caught in the middle of the newest earthquake that rocks the financial SL world, or are cut short on cash and unable to pay tier on the due date (January 15th) please contact me so we can work on a solution.
L&LBT – a financial services solution provider that I am involved in as a non-executive director – has already taken the necessary actions to comply with the new LL policy according to their statement here. I would strongly advise against a panic and dumping of stock. Though it would allow me to expand my share in the company 
January 8, 2008 at 10:19 pm
So SL banks and invenstment places are going to be closing. does this mean SLX is going too? They are infact an IN WORLD invenstment Company? Seems this new addition to the ever growing Linden labs Terms of Service will force more SL businesses to close thier doors in turn the ammount of $US spent on SL in a 24 hour Peroid will drop so drasticly that soo the only thing $US will be spent on is Land Fees set by Linden Labs
January 9, 2008 at 9:49 am
I’d like to stress that it is way too soon to have absolute certainty about anything at this stage, CheerGirl Allen. I’d say that SLX – if you are referring to SLexchange – will not be affected as they don’t offer interest on money in any way. Same goes for Apez.
Neither of them are financial institutions, but rather payment facilitators and service providers. You only park your cash with them to later have easy access to it when buying elsewhere. That being said, one can never be too certain how the vague LL policies will turn out exactly.
I already know that quite some “banks” have made changes to their operations to comply with the new policies, even though they have till January 22nd 2008 before the policy will be enforced. I would not panic and give everyone involved and taken by surprise the time to come up with a solution. If the “bank” you invested in was fraudulent to begin with, the new LL policy will only result in things going downhill sooner, but the end result would have been the same. If the institution is ran by trustworthy and responsible business owners, panicking right now would only make it much harder for them to deal with the trouble at hand and it could result in them too being unable to cope with things.
Remember : panic never solved anything. I strongly suggest you give all “banks” 24 to 48 hours to regain their composure and inform their depositors on how they will be handling the new policy. If you can’t get any information from them, or are not pleased with their replies, feel free to panic then
January 9, 2008 at 12:10 pm
Well, well, well…
A game is not now a game, virtual L$ now have added value? Great thanks for the announcement! First gaming, you sat and watch while many casino operators spend REAL $$ to develop, then you flick the switch and say bad luck! No warning, NO COMPENSATION. Now this, class act!! What next, LL sued, residents banned, SL gone..
Second Life becomes more like Real Life every day, except there is a difference…LL is a dictatorship. We are all BOTS.
January 9, 2008 at 3:59 pm
Yet on the other hand, Cash, I do applaud LL for giving us advance notice. While we could still argue that 14 days is way too little to be able to unravel what was built up over months of hard work, it beats the “effective immediately” notice we got on gambling.
I too wonder where SL is heading and the ride will be bump at best in 2008. As this virtual world moves towards a more mainstream and corporate venture, we’re bound to see more regulation and policies creep up. The days that it was the wild west are definitely over now. In a way I even support LL for taking the decision, though they should have foreseen it right from the start. If this leads to more stability and credibility, we will all benefit from it in the long run. Those that survive, that is
January 10, 2008 at 6:49 am
This really has more to do with money laundering than the Ponzis everyone is dwelling on, I think.
The ponzis are bad, the scamming is bad, and don’t get me wrong on that. But just try to track fraud dollars entering the system from a stollen bank account. The L$ enters the system, and goes to a bank. The bank has L$ going out every which way, and probably shares a user account with a user who is also doing transactions (more than likely, since you can’t create separate accounts holding Lindens, without creating multiple alts). There’s no facility to have two or three separate accounts.
So Linden has to track this fraud money entering the system, and track it down, to where it is actually sold to a player. So the gold farmer sets up a bank, and everyone gives it money. He sells the money for real world currency. He frauds like crazy, using fake cards to do it.
But the bank has 500, 1000, 10000 real people too. They’re participating as well, and… the end result is that its impossible to prove which transactions are fraud and which aren’t.
Keep in mind, lets say they fraud L$10000. Someone could buy L$100, four people could buy L$500, etc. That money doesn’t all disappear at once, and probably doesn’t get hit for 30 days. So you have 30 days of transactions to look at, if you’re Linden.
The issue is you really need to shut down the L$10000 and all people involved in distributing it, to keep the economy stable. But at the same time, you have thousands of legitimate users conducting transactions. And so Linden has a choice to make between pain and pain.
If they allow the banks to operate, then tracking fraud becomes almost impossible.
If they don’t allow the banks to operate and shut them down, then every user who used the banks is mad at them.
There’s literally no way they can win.
And like Gambling, the servers are subject to the laws of whereever they are physically located, and in most of the civilized world, that means all gambling for real-money equivalents is forbidden. A casino sells you tokens, and then buys those tokens back (chips, etc.). That doesn’t make them legal, and in many cases it is just illegal to have them.
I suspect that these are very commonly used for money laundering, probably more so than the Ponzi’s even.