August 8, 2007 by Nobody Fugazi
Posted in
Via this comment, Benjamin Duranske shares:
Update: Endgame
A highly placed source within Ginko has told me that all of Ginko Financial’s functionality will be going offline shortly.
My source says that “Nicholas has made the final call, and is converting everybody to GPBs.”
GPBs, for those of you who don't know, are named for [w:perpetual bonds]. Perpetual bonds are bonds with no maturity date; they pay coupons, or dividends, over long periods of time. In essence, deposits will become long term loans to Ginko which pay interest - and which are controlled on the WSE site.
You can research GPBs here. As a sidenote, this explains the split of Ginko Perpetual Bonds.
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Updates:
11:47 p.m. SLT: Benjamin Duranske posts Commentary: Second Life Community and Ginko.
10:06 p.m. SLT: It's official. This notecard (thanks, anonymous!) says it officially, as does the Ginko Financial website:
Dear accountholder,
Ginko Financial was established in December 2004 at a time when Second Life had less than 20,000 residents. As one of the strongest brands in Second Life we have seen the economy grow to many millions of residents and thousands choose Ginko Financial as their preferred financial services provider.
As you probably already know, Ginko Financial has experienced some challenges in these last couple of weeks. Following the ban on gambling in Second Life we began experiencing a wave of withdrawals from Ginko Financial. This led the funds we keep in reserve for day to day use to be exhausted, which evolved into a full blown panic depleting even our last line of cash reserves and resulting in the current situation, with about L$50,000,000 queued up for withdrawal. This situation is unsustainable, as we would be forced to sell off our assets at a
significant discount in order to honor such withdrawals, thus severely harming Ginko Financial's long term prospects and it's ability to ultimately honor all of it's obligations to accountholders.We had some hope that calm would return to the public and we could resume normal operation, but that does not seem to be likely or even possible anymore. Drastic steps have to be taken in order to protect YOUR wealth while giving an escape valve to anyone who is in panic or simply in need. We are not going to vanish and the investments we made still exist and will not be sold off.
After considerable thought, 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. These bonds, listed on the World Stock Exchange (www.wselive.com), will allow Ginko Financial to recover from recent events by removing all pressure from our cash reserves while providing accountholders with a way to cash out on an open market.
All accountholders will have an account automatically created on the World Stock Exchange (www.wselive.com). Customers will receive one bond with a face value of L$1 for every L$1 they have deposited in Ginko Financial. Each Ginko Perpetual Bond will yield L$0.03 or 3% of face value per quarter (every three months). Ginko Financial will be actively purchasing these bonds in order to help keep prices at as high a level as possible.
Ginko Financial will bounce back from this and if you stick with us, you wll not lose anything. If you must sell the bonds, then you must sell, but I advise against accepting low prices.
Regards,
Nicholas Portocarrero / Andre Sanchez
There it is.
8:08 p.m. SLT: I somehow missed this release:
Dear Bondholder,
Interest payments are being changed from monthly to quarterly. The yield is still L$0.01 per month, only the frequency of payments is being changed.
Regards,
Nicholas Portocarrero / Andre Sanchez
What this means is that if you have 100 GPB bonds, you will collect 1 3 Linden dollars as revenue - every fiscal quarter, or 3 months - unless, of course, these are fictional quarters where there are more or less fiscal quarters per year. *Smirk*
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GOT THIS NOTECARD FROM A ATM
Dear accountholder,
Ginko Financial was established in December 2004 at a time when Second Life had less than 20,000 residents. As one of the strongest brands in Second Life we have seen the economy grow to many millions of residents and thousands choose Ginko Financial as their preferred financial services provider.
As you probably already know, Ginko Financial has experienced some challenges in these last couple of weeks. Following the ban on gambling in Second Life we began experiencing a wave of withdrawals from Ginko Financial. This led the funds we keep in reserve for day to day use to be exhausted, which evolved into a full blown panic depleting even our last line of cash reserves and resulting in the current situation, with about L$50,000,000 queued up for withdrawal. This situation is unsustainable, as we would be forced to sell off our assets at a
significant discount in order to honor such withdrawals, thus severely harming Ginko Financial's long term prospects and it's ability to ultimately honor all of it's obligations to accountholders.
We had some hope that calm would return to the public and we could resume normal operation, but that does not seem to be likely or even possible anymore. Drastic steps have to be taken in order to protect YOUR wealth while giving an escape valve to anyone who is in panic or simply in need. We are not going to vanish and the investments we made still exist and will not be sold off.
After considerable thought, 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. These bonds, listed on the World Stock Exchange (www.wselive.com), will allow Ginko Financial to recover from recent events by removing all pressure from our cash reserves while providing accountholders with a way to cash out on an open market.
All accountholders will have an account automatically created on the World Stock Exchange (www.wselive.com). Customers will receive one bond with a face value of L$1 for every L$1 they have deposited in Ginko Financial. Each Ginko Perpetual Bond will yield L$0.03 or 3% of face value per quarter (every three months). Ginko Financial will be actively purchasing these bonds in order to help keep prices at as high a level as possible.
Ginko Financial will bounce back from this and if you stick with us, you wll not lose anything. If you must sell the bonds, then you must sell, but I advise against accepting low prices.
Regards,
Nicholas Portocarrero / Andre Sanchez
Thanks for posting this
I'll place it above as part of the post.
I think your original post
I think your original post is a little flawed; the text of that release would seem to indicate that the bonds will now pay (or rather, now say they will pay) 3 cents every quarter rather than 1 cent per month. Great to have a market where you can just make stuff up as you go along though, eh?
Doh!
Good catch. Fixing. Thanks for pointing that error out.
Savings accounts forcibly
Savings accounts forcibly converted to perpetual bonds at a value that is 10 times the current market value of the security. I would hope that even if Ginko does have the investments to avoid being a Ponzi such action would be highly illegal.
No banking policy in Second Life
You can reference Philip Linden's comment here.
Of course, that's all kind of weak if the real world law is to be applied. But then, I'm not a lawyer. I don't play one on the internet.
Lawyering Up
"But then, I'm not a lawyer. I don't play one on the internet."
I am, and I do. It's illegal because it's part of the same scam. It's just the exit strategy.
Right, but...
(Bear in mind I agree with you, Benjamin, but I don't see it as a straight shot. You're the lawyer. You tell me.)
The connection between the Linden dollar and the real dollar is controlled by Linden Lab. Now, as Linden Lab defines the Linden dollar as:
Now, I don't buy that the Linden dollar is a fictional currency - I'll go with a fiat currency. We all should know that the Terms of Service were tossed out in Bragg v. Linden Lab in that scenario - but could it be tossed out in this scenario? I would like to think so, personally, since the future of the metaverse as I see it would require a currency which is not fiat or fictional. Castronova has argued this point with virtual objects convincingly in his writings, as have quite a few others. Rosedale's statement about building a country makes it all akin to a [w:micronation], which I do agree with.
Now, you've stated in the past that Linden Lab could be pulled into the case - something I could agree with - but as I see it, one of two things could happen. Linden Lab might argue with their ToS (why else did they write it?) - and a precedent has been set that weakens the ToS in a Court. If they acknowledge that Second Life is at least similar to a micronation - would that aspect of the ToS even exist?
So let's say that they say, 'hey - we only manage the world'. What do you do then? Is the virtual world veil finally pierced at that point?
I know that you've already said you wouldn't take part in such a case - but let's have some fun with this. How would you argue for Linden Lab, or whoever Nicholas Portocarrero really is?
And bear in mind, another name might now be involved - as WSE seems to be an accomplice in some regards.
So let's see. We have a virtual world with servers in the United States, a supposed Brazilian and an Australian being taken to court by people from around the world. How would you approach this? :-)
You're absolutely right...
It's a hell of a question and too much to handle in a single comment. The #1 argument for LL is the TOS, as you said. Same for Ginko's guys. But against that? Well, remember, it's a jury (at least in the U.S.). So I'd go up with a laptop and a big screen, I'd give Linden Lab $50 in exchange for some Lindens. I'd buy a suit for my avatar just like the one I was wearing in court for seventy-five U.S. cents. And the I'd get the other $49.25 put back on my credit card.
You tell me I didn't just pay seventy-five cents for a suit.
And I'd hammer that again and again in argument. It's a suit. I gave three U.S. quarters for it. I don't have them any more. How are these "Linden" things not money?
Remember, it is about the twelve people in the box. They're who is important in these cases. My bet? This looks like money ,smells like money, and they're going to decide it's money.
Nice!
I like the laptop bit. Very nice touch. :-) Two quotes:
pwn3d, as they would say...
I was thinking real world
I was thinking real world criminal liability I would assume(maybe wrongly) it's illegal to sell me one product then forcibly take that product and give me another in exchange.
Good question.
I don't know, to be honest. I expect it's some kind of consumer fraud to do that, but I don't know what kind off hand.
Bonds
How will Ginko earn funds from which to pay this interest?
Good question.
No answer here. I can't see that their inworld assets would produce a substantial dividend...