Saturday, 11 August 2007


Ginko Financial has rolled down the shutters, frozen deposits and issued bonds in place of dollars to stop a run on the bank.

We have concluded that the only way forward from this is to convert, compulsorily, all customer deposits into a tradeable debt security called Ginko Perpetual Bonds.

Who cares? It is a Second Life business, working in L$, Linden dollars. The crisis follows from gambling being banned in the virtual playpen, supposedly.

The catch is that you can buy L$ with real money to play the game, or sell L$ back for real money. One US$ trades for about L$267 so the bank currently has (it claims) deposits of around US$725,000 in real money terms.

The 'bonds' are meaningless game artifacts: worth whatever you want to pay for them, or zero, depending. They seem to be trading at about 14% of face value today.

There have been concerns about the bank's honesty before now. Here is a Reuters avatar inside Second Life interviewing the avatar CEO (and owner):

Ginko Chief Executive Nicholas Portocarrero, who declined to provide his real-life name or location, told Reuters in an interview inside Second Life that the interest payments are funded by other investments the bank has made, and denied that the bank was a Ponzi scheme.

I wonder whether any penalty would apply in real life if the CEO just cashed in his L$ assets and walked away with the money. I had fun being an imaginary bank in an imaginary world. Bye.

Fraud, money laundering, embezzlement - there must be a lot of opportunity in a completely unregulated money market, if you've got the basic financial smarts.

Me, I spent an hour in Second Life trying to work out how to change my underpants, got bored and went away. I don't do a lot better than that in real life.


I came across Ginko while reading up on Russneft, Gutseriyev, Deripaska and whatnot. Can't imagine how that happened. Sorry.


david mcmahon said...

How did the interview go?

Chertiozhnik said...

Hi, David - the interview is this coming Monday... my fingers are crossed so tight I can hardly type.

Thanks for asking! Update Monday eve.

OHara said...

Never had a go at Second Life - it seems very time consuming.
Why is changing your underpants one of the first tasks? Were you planning on running under a bus or something?

Chertiozhnik said...

I was doing the change-of-image training and figured if I could get me daks off, change the trolleys and get the daks back on again, I'd have got the hang of it.

Really I should just have given myself a nice haircut, bought a suit and got on with the scamming.