Caveat Emptor - Or Not... Linden Labs To Shut Down "Banks" In Second Life

In the wake of the collapse of “Ginko Financial” in August 2007 and a significant number of Resident complaints that in-world “banks” are defaulting on their promises, Linden Labs has decided to break with its tradition of not interfering with “in-world” activities by prohibiting in-world companies from offering interest or any direct return on investments in Second Life.

Starting January 22, 2008, Linden Labs will be removing from Second Life “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 Labs has indicated that after January 22, 2008, it will have the right to sanction companies offering so-called banking services by means of “suspension, termination of accounts, and loss of land”.

The policy does not appear to extend to companies that submit appropriate, approved documents from a regulatory authority qualifying them as a “[chartered or registered] bank” or to companies that do not accept payment in exchange for investments - but “who are merely conducting marketing or education”.

This is not the first time Linden Labs has stepped in. It took a similar position in the past with respect to gambling in Second Life. So what about in-world “lawyers”? Has this latest issue about in-world “banking” possibly brought to light issues of broader application, for instance, in respect of “professional” designations/organizations operating in Second Life?

Coverage at Second Life Blog

Answers to FAQs regarding Linden’s policy at Second Life