Second Life bans virtual banks

Second Life has announced a ban on virtual banking in the 3D online world in a bid to prevent the “destabilisation” of its economy.

Linden Lab, the virtual world’s creator, said it had been forced to intervene after receiving complaints about a string of dodgy in-world financial offerings that promised unfeasibly high interest rates for investors.

In a post on its blog, it said the schemes, if left unchecked, posed “unique and substantial risks” to the financial health of the much-hyped community:

“As of January 22, 2008 we will begin removing any virtual ATMs or other objects that facilitate the operation or facilitation of in-world “banking,” i.e., the offering of interest or a rate of return on L$ invested or deposited.”

Linden Lab - pretty optimistically – has always said it would limit its role in policing members' activity in Second Life.

But it has already banned gambling and said it had no “workable alternative” other than to step into the banking arena.

It said it had received complaints about several in-world ‘banks’ that ended up leaving depositors with nothing to show for their investments – the most high profile of which was Ginko Financial, which declared itself insolvent last August.

Linden Lab added:

“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.”

According to TechCrunch, Second Life banks are now being hit by a run on their funds as residents seek to withdraw their cash before the ban comes into force. What a complete mess.

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