Rumor after rumor has been floating around about particular events that could have caused the Linden's out-of-nowhere ban on in-world banking.
I was not at all surprised today when I found out that, as usual, Second Life's ivy-leaguers have rushed to the front of the line to pass out credit for exactly what happened.
I was a bit shocked, though, to see an inference on Benjamin Duranske's "Virtually Blind" blog today that it was actually an article at Technology Reviewentitled "The Fleecing of the Avatars" that was the culprit behind the latest and greatest policy shift from Linden Lab.
"I think the timing may well have been due to [that] story," Duranske said according to a quotation published at Technology Review.
With the recent ban on Second Life banking by Linden Lab, a lot of friends and just bystanders in general have asked me about my shock level in response to this move.
While my stance may be a bit unpopular, I have to tell the truth on this one. I cannot say that I am surprised by the policy in itself, given the long track record of financial disasters we've seen in Second Life.
To name just a few...
Virtual Commerce Exchange (VCE) / Sal Ackland (Kyle Van Leuven) Disappeared with investor funds. Some refunds were made, though many investors report not receiving the full amounts they entrusted to Mr. Ackland.
Ginko Financial Group / Nicholas Portocarrero (Andre Sanchez) Declared itself insolvent after the Linden Lab gambling ban. After failed attempts to raise additional capital, balances were converted to bonds. After bond payments ceased, bondholders received shares of the World Stock Exchange dumping-ground stock known as WTF.
Just an update on what's happening today with JT Financial.
Firstly, we would like to thank everyone for their support. Today, we've seen such a massive outpouring of goodwill... it's absolutely hard to imagine. It's great to see the Second Life investment and financial communities pooling together to help out in what is truly one of Second Life's darkest hours.
ATMs opened shortly after 1:00 P.M. SLT this afternoon in JT World. Although we had our share of frightened customers, customers who had no idea what was going on, and customers in need of venting their anger, all in all the show of support was massive with more deposits being made than could possibly be imagined given the circumstances.
While much is still up in the air right now, operations at JT Financial continue as normal... we are honoring withdrawal requests of up to L$5,000 per user, per day, and continue to honor deposits. At present, we are continuing to pay interest through January 22, 2008.
The deposit reserve is in much better shape than could ever be expected, according to reports, and JT Financial is 100% solvent. At this late hour of the day, it's safe to say that JTF has again survived yet another financial disaster as others have faltered, or as some may have an uncertain future.
JTF has maintained an open and honest line of communication during this situation, as can be seen via the numerous updates at SLReports.net. If you have not done so already, you should check out our Official Statement and Plan of Action for this matter at your earliest convenience.
We are now less than 2 hours away from what I believe is the “Moment of Truth”.Once we open up our ATMs at 12pm SLT, we’ll know exactly how much trust our customers have left in us.I do thank those that have expressed their word of support, but with over 10,000 customers, a handful of people showing their support may not be enough to avoid a run.Hopefully, this statement and a detailed list of our long-term objectives may sway enough people to continue doing business with us.Yes, a lot of the following information are things I would rather not disclose, but they would be very difficult to achieve if an inevitable bank run does occur.
Wow. That's really all I know to say at this point.
If you're not already aware, the Second Life financial markets closed out today in an uproar. Because of Linden Lab's new policy prohibiting in-world banking, we've seen virtually every bank in Second Life go offline, stocks halted due to price fluctuation, and some stock exchanges completely out of service, in general.
It is unclear which banks will come back online. We don't know how much money, if any, has been lost at this point in the game. We don't know if CEOs will disappear, and we don't know if all of our exchanges are going to be here in the next two weeks.
In general, there is simply a lot we don't know right now.
I am sure that many of you are now aware of Linden Lab’s new policy regarding banks, particularly the banning of any unchartered banks paying interest effective January 22.Upon the release of this new policy, many of our 10,000 plus customers attempted to withdraw all of their funds, thus crashing our server.We have been able to get the server under control, but I have decided that it is better to leave the server off for 24 hours to help ease the tension and bank run caused by the mass panic, as well as allow everyone time to calm down and give me a chance to assure everyone that their money is safe.
Throughout all of the problems we that faced last year, we were able to remain firm with our 100,000L daily withdrawal limit, and it saddens me that we cannot hold firm to that limit with this new problem we are now confronted with.However, we currently only have about 7Mil in reserve for withdrawals, and I do not feel that it is close to being sufficient to cover the run that we’ll experience once we open up our ATMs.In light of that, I will try my best to assure everyone that we plan on staying here for the long run, and will cover ALL of our obligations to our customers.
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