Meltdown Not Restricted To Real World

In case you’re tired of hearing about real life economic problems, you can take heart in the intrusion of real life crime in to the fantasy world economy of Second Life. Alana Semuels of the Los Angeles Times reports on the first Second Life Ponzi scheme:

Stephanie Roberts knew Second Life was just a computer game, but she couldn’t resist the virtual world’s promise of a real-world interest rate of more than 40 percent.

The 33-year-old from Chicago, who played the game as a raven-haired vixen called Zania Turner, deposited $140 in Ginko Financial and waited for the money to grow. Instead, it vanished five months ago when Ginko, perhaps the first Ponzi scheme perpetrated by three-dimensional online avatars, left Second Life.

I was foolish,” Roberts said. So were many others. Ginko took with it about $75,000 in real-money deposits, shaking faith in Second Life’s venerated lawlessness – no cops, no courts, no government – and unnerving Linden Lab, the usually laid-back San Francisco company that created it.

It’s amazing that it’s taken this long for someone to start preying on the hoards of people wandering the Second Life landscape looking to strike it rich. Apparently the mix of laissez faire lawlessness and good old fashion fraud has scared the game owners enough to shutdown all virtual banking in the game. The problem is that it appears to be a system waiting to be exploited over and over again since there’s little chance of being caught and even less chance of being charged with a crime. From later in the piece:

Ginko was able to skip town and leave virtually no trail for authorities, if there had been any authorities. Even Linden Lab might not know the identify of the avatar who ran the bank. Company executives declined to be interviewed, but lawyers in contact with unhappy Ginko depositors said they weren’t aware of any investigative action taken by the company.

No individual seems to have lost enough money to make filing a lawsuit worthwhile, said Robert Bloomfield, a professor at Cornell University’s School of Management who has been following the Ginko case. Because Second Life members live in different countries, “It’s not at all clear what jurisdiction you would file suit in,” he said.

Given the lack of law enforcement (virtual or real) why wouldn’t criminals flock to the service?

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