Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Risk

1/22/2008
11:50 PM
George V. Hulme
George V. Hulme
Commentary
50%
50%

Bank Failure Spawns New Regulations

Few may have noticed, but during the real-world summer stock slump Ginko Financial, a bank within Second Life, went bust. And ever since its failure, Second Life citizen complaints of interest-rate scams seem to have soared. "Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world "banks" defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20%, 40%, or even 60% annualized, reads a recent blog

Few may have noticed, but during the real-world summer stock slump Ginko Financial, a bank within Second Life, went bust. And ever since its failure, Second Life citizen complaints of interest-rate scams seem to have soared. "Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world "banks" defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20%, 40%, or even 60% annualized, reads a recent blog post from the virtual world operator, Linden Lab.60% return? It's not easy to turn that down . . .

The result? Effective today, any business purporting to be a bank in Second Life must prove that it's also a legitimate banking institution in the real world. "As of Jan. 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter," the post reads. "We're implementing this policy after reviewing Resident complaints, banking activities, and the law, and we're doing it to protect our Residents and the integrity of our economy."

One might expect there to be a backlash against the more stringent rules. Surprisingly, that's not the case. Many Second Lifers actually want to see an economy they can trust.

Here's what one Second Life citizen had to say, and reflects the opinion of many others who commented on the new policy. "While this may be a painful process initially, I think this is the right step in the long run. I personally lost the equivalent of a few hundred U.S. dollars from the Ginko failure, and while I expected part of that investment to be rather speculative, I didn't expect complete failure. The mismanagement of the Ginko system was criminal, in my opinion, and we need to squelch this activity."

Another commenter went so far as to suggest real-world regulators be brought in to help develop and enforce regulations to help a proper banking system prosper.

Not all see it this way. "I think LL [Linden Lab] is completely irresponsible in dealing with this. As usual, things get worse because LL fails to plan ahead. Honestly-run banks are going to get hurt by this, and in the end, honest investors and customers. LL needs to get their heads out of their posteriors and think before they act."

I couldn't disagree with the latter post more.

Good security, and enforceable (as well as fair and reasonable) rules that help to establish trust in the system, any system, whether the economy, the Internet, or even Second Life can only help it to flourish.

If fact, this type of step is actually necessary. This is especially so because the virtual Second Life economy is directly linked to the real-world economy: Linden dollars can be exchanged for U.S. dollars.

One can only expect to see more in-world "virtual" crime to increase as the virtual economy grows. So, Second Lifers, brace yourself for more scams, more attacks on account holders, and more rules as the popularity and power Second Life prospers.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
44% of Security Threats Start in the Cloud
Kelly Sheridan, Staff Editor, Dark Reading,  2/19/2020
Zero-Factor Authentication: Owning Our Data
Nick Selby, Chief Security Officer at Paxos Trust Company,  2/19/2020
Register for Dark Reading Newsletters
White Papers
Video
Cartoon
Current Issue
6 Emerging Cyber Threats That Enterprises Face in 2020
This Tech Digest gives an in-depth look at six emerging cyber threats that enterprises could face in 2020. Download your copy today!
Flash Poll
How Enterprises Are Developing and Maintaining Secure Applications
How Enterprises Are Developing and Maintaining Secure Applications
The concept of application security is well known, but application security testing and remediation processes remain unbalanced. Most organizations are confident in their approach to AppSec, although others seem to have no approach at all. Read this report to find out more.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2015-0565
PUBLISHED: 2020-02-25
NaCl in 2015 allowed the CLFLUSH instruction, making rowhammer attacks possible.
CVE-2020-9393
PUBLISHED: 2020-02-25
An issue was discovered in the pricing-table-by-supsystic plugin before 1.8.2 for WordPress. It allows XSS.
CVE-2020-9394
PUBLISHED: 2020-02-25
An issue was discovered in the pricing-table-by-supsystic plugin before 1.8.2 for WordPress. It allows CSRF.
CVE-2019-3999
PUBLISHED: 2020-02-25
Improper neutralization of special elements used in an OS command in Druva inSync Windows Client 6.5.0 allows a local, unauthenticated attacker to execute arbitrary operating system commands with SYSTEM privileges.
CVE-2020-8809
PUBLISHED: 2020-02-25
Gurux GXDLMS Director prior to 8.5.1905.1301 downloads updates to add-ins and OBIS code over an unencrypted HTTP connection. A man-in-the-middle attacker can prompt the user to download updates by modifying the contents of gurux.fi/obis/files.xml and gurux.fi/updates/updates.xml. Then, the attacker ...