Banks Collapsing in Second Life
Jan 25th, 2008 by Gary
“Cheer Up, Ben: Your Economy Isn’t As Bad As This One” Wall Street Journal. 23 January 2008. Page A1. Not only are real banks struggling with sub-prime mortgage problems, Second Life is shutting down virtual banks that were failing to deliver high returns they had promised their depositors.
All virtual banks (about a dozen) were closed. Many players convert actual dollars into “Linden dollars” to deposit in their virtual bank accounts and use in the game. Some virtual banks have done well, others have lost money in land and gambling deals. Under the new rules, only chartered banks will be allowed.
A virtual run on the banks left many players unable to get their money. The Journal reports a previous run on a virtual bank in August may have cost players $750,000 in real money.
Linden announce yesterday’s shutdown two weeks ago. Players started coming into the banks to withdraw their money. Some banks shutdown their virtual ATMs.
“Linden essentially acknowledges that the financial services being offered in its virtual society have evolved to the point that they need to be regulated by the real world. ” From now on those accepting deposits inside Second Life will have to have a real government registration statement or financial institution charter.
Many other reports covered the bank closings in Second Life. Some report Ginko Financial is the virtual bank that failed back in August in a virtual ponzi scheme. Others point out the increasing parallels with the real world such as the possibility of being charged with a real crime for your actions there, and the recent run on the banks. Some say it is getting to real to be an escape from reality.