SL International Business

We’ve been researching the effects, and debating them a lot, and really, there isn’t anything definitive.
If you start reading this, please read in full.

References:
LL Blog Post
Telephone conversation with Patch Linden by Sully Okelly
Conversations with our lawyer
Conversations directly with Linden Lab (Matthew Linden)

From the initial blog posting, the thought was that automated methods were banned, including all direct methods of return on investment, including stock exchange dividends, by anyone else than chartered banks.

Not only that, but the complete communication is totally disrespectfull and insulting to Our profession. Granted, many were scams, but not all of us.

On other note, it was also believed that all forms of investing are banned, but they are not, you just can’t get any return from them, or that’s what LL wants us to believe, thus wanting to kill investment in whole.

The irony of the whole post is that the financial sector is a vital part of the SL economy in whole, capitalizing in different areas, and most importantly, putting the money needed for all kinds of new ventures, creating new content, thus enhancing their service.(LL’s service)

“We will not apply this policy to companies who submit a registration statement, charter, or other applicable license from a governing regulatory authority, or who are merely conducting marketing or education, but not accepting payments.”

Now, that means a lot of things. First of all, registration statement, when going by that literally, it could be as simple as registration statement of a corporation, or anything else. Joking aside, they are requiring an license of sorts, making it RL regulatory. Problem however is, no one is going to grant a license to do banking for value limited license use rights. That’s right, that’s the definition of Linden Dollar(L$), it’s not an currency. Linden Lab cannot even decide which one it is. Furthermore, as it’s legal definition is value limited license use right, they CANNOT demand banking charter, it’s unlawfull, because their terms of service becomes impossible to honor.

Also, if they are now saying L$ is an currency, Linden Lab themselves need to be a registrated bank. Yes, that’s right. That question has been raised in the past by several lawyers already, questioning, should Linden Lab be registered bank?

However, the policy has further implications, which is not stated, in the official communication. Are they going behind our backs to get claim some land? Maybe, but let’s not venture into how evil, or anti-competitive, Linden Lab can be.

Further communication, directly by persons working at LL brought in more light to this chaos, however it is ALL bad news.

First, the communication by Sully Okelly with Patch Linden, you can view it at SLCapex Forums.

Stock Exchanges are clear of problems, and companies listed can offer direct return on investment, but not a guaranteed one, which goes against the policy stated in the blog posting. Bizarre? Wait, there’s more!

All interest GIVING and TAKING is banned, without a bank charter, credit union or some other kind of license, which cannot be acquired for L$, as it’s not an real currency. That means, credit cards, personal loans.

Loan, escrow and CC only type of banks are fine and can be unchartered, says Patch Linden. However, Matthew Linden explicitly told me convenience and/or security related financial services are banned also. Which is true? I do not know.

ATMs targeted only because they are tied to interest bearing accounts. Then why, Matthew Linden tells a convenience service is also banned?

Loans, Loans, Loans. Personal Loans RL regulation is following: Make an omissory note. Nothing else. Exactly nothing else, that’s all to it. However, they are banned too, because of tied interest. Can they over rule RL laws? Definately not. Pending clarifications.

Now, let’s get back to the denied guaranteed return on investment. Now, anything into what you pay, and can get somethign out, as promised upfront, can be considered guaranteed return on investment. Return on Investment is in economics calculated as % of the original investment. That means, if you get 50% ROI, and invested 100L$ initially, you get back 50L$. That means, anything taking deposits and allowing withdraws are banned, in the strictest to the letter interpretation. That’s right folks, it seems they can decide by face value. Yikes!

You can’t even make a personal loan, which has delivery vehicle for the funds in L$ anymore. That’s very saddening, very very saddening, and constrictive.

As for the convenience type of services, Matthew Linden told us that the normal RL regulation and registrations are not enough for LL neither. That’s right folks, you can’t make any kind of service of the type without credit union or bank charter.

Now, as you read, some of these are just completely unbelievable, some obvious and understandable. The unbelievable however, i think is the cause of corporate schitzophrenia, not their actual policy. That corporate schitzophrenia, is going to make a lot of headache to many people in the future. I do not believe a word Matthew Linden told us, he just probably didn’t to read the actual question and word bank was enough for his reply, or he really didn’t know and the internal reason for corporate schitzophrenia happened, lack of internal communication and debate.
Like in Metanomics were, this is a bit like if you formed in Denmark a fish-bank, where fishers could bring their fish for storage, and they would get interest paid for the storage of fish (or charged), and the goverment of Denmark would decide to require bank charter for that. Fish isn’t a currency, is Linden Dollar? Linden Dollar, by LL so far has not been a currency, and thus, if by 22nd of January when the policy comes into effect, they do not announce it as a currency, and become a chartered bank, they are making with that alone their terms of service impossible to honor, which is against contract laws.

Also, 2 weeks forward notice for most, and few people given few days advance notice is not enough for anykind of registration, by far. 2 weeks for an LLC even is barely enough from start to finish, and requires some luck to achieve. (The initial paperwork just takes a day or two, but that’s just beginning of the foundation), which again makes their terms of service impossible to honour, without huge financial losses, and keeping the doors closed for prolonged periods.

Linden Lab has opened itself for huge legal pain, and litigations. And there is a lot of reasons, why Linden Lab could be sued for this, and i’m sure i didn’t cover them all, not even close.

Bottomline, is that this policy is better to be a bad joke from them, a really bad joke from them. If it is not, expect somekind of court cases to rise from this, which could lead to the demise of Linden Lab. I think that Linden Lab might have opened the door for more bad publicity, than the financial sector in SL economy could have done themselves. The ultimate reason, why i think this policy came into existense.

Second Life isn’t just that fun anymore, imho. I always knew biggest threat to my business was Linden Lab itself, ironically, it’s so for a lot of people. Ironically, MindArk (Entropia Universe) doesn’t have any problems like this, and  hell, they are now even giving out ATM cards, and they have 5 banks operational in Entropia, with the blessings of MindArk itself, without requiring RL regulation nor bank charter.

Unfortunately, on my books, Linden Lab is listed on the “Do-Evil Companies” section.