Second Life Lesson: Investing Real Money in Pretend Bank Carries Risks
The virtual online world of Second Life has shut down about a dozen of its pretend financial institutions following complaints that they failed to pay promised returns on real money.
Some players of the online fantasy game had been lured to invest real money based on promises of high returns, the Wall Street Journal reports. Linden Lab, the creator of the virtual world, said it acted in response to player complaints.
While some of the virtual banks paid interest as promised, others used the money to gamble and make land deals that failed in Second Life. With the shutdown, players are finding they can’t withdraw money from the game’s virtual ATMs. Another run on banks in August may have cost depositors as much as $750,000 in real money, the newspaper says.
Linden shut down virtual gambling on the site this summer, citing conflicting gambling regulations around the world. Real bank deposits are converted into Linden dollars for use in the virtual world at an exchange rate of about one dollar to 269 Linden dollars.
Real banks have shunned Second Life because dealing with avatars, the make-believe figures who populate the game, could violate “know your customer” rules.
Benjamin Duranske, a lawyer who runs the Second Life Bar Association, told the WSJ that anything-goes rules may change when actual money is involved. “If this is real money, there is an argument that you need to follow real law,” he said.
