1. Three comments.

First, I'm hopeful too, but being hopeful and being realistic are not mutually exclusive. I'm hopeful that they come to their senses, shut down deposits, and divide what is left pro-rata amongst people based on their original deposit amount.

Second, this is troubling:

"If normal banking laws applied to this situation, it's pretty certain this sort of activity would be wildly illegal."

Why wouldn't "normal banking laws" apply to this situation? If I did this with a magazine ad, or a web site "normal banking laws" would apply. Why wouldn't they here?

Third, I have an answer:

"Just which of the TOS does it break?"

There's always something they can use if they want to. It violates whichever one they use to justify banning people who sell land and never deliver. Whatever they used to justify banning Bragg, for that matter.

This one will do for now, I haven't had a chance to parse the whole thing in a few months.

"In addition to abiding at all times by the Community Standards, you agree that you shall not: (vii) upload, post, email or otherwise transmit any unsolicited or unauthorized advertising, or promotional materials, that are in the nature of "junk mail," "spam," "chain letters," "pyramid schemes," or any other form of solicitation that Linden Lab considers in its sole discretion to be of such nature;"

Posted at 10:35PM on Aug 6th 2007 by Benjamin Duranske

2. Why would normal banking laws apply?

If I, RL set up a bank, heaven forbid, I can't just buy some space, set up a business as a bank and go for it. I sign up to a whole bunch of contracts and legal checks and measures.

If I set up a financial institution in SL (equally heaven forbid), which of those do I sign up to? I may choose to set up within them, but at the moment I don't believe I'm forced to. Certainly Ginko didn't. Their website still carries the disclaimer: " Ginko Financial and its affiliated businesses are not registered in any way with any governmental organization. Not warranted, guaranteed, or insured." How important that may be legally I will leave for you to decide, or the courts if it comes to it, but I rather suspect the reason banks are licensed as they are is so that the special parts of the law regulating them clearly apply to them. The legal institutions recognise them as a bank rather than something else. (In the UK for example, building societies are rather different to banks, from both a legal and an activities point of view. I don't know if it's easy to set a building society up, but the number of them still in existence makes me suspect it's a lot easier.)

The situation might be different in the US, I don't know anything about your banking institutions and laws, but I'd be surprised if any Tom, Dick or Harry can just say "I'm opening a bank" without registering as such, and through this process being bound by the laws of the country regarding their activities. Even if they do, I wonder how the laws might regard something that they don't currently recognise as currency?

Fraud law, as I understand it, is different. I, as a private individual, can defraud you as a private individual. I can certainly see that being brought to bear, whether successfully or not is another matter. I'm still not a lawyer, never will be, but can you tell me what bits of my understanding are wrong and would cause Ginko to be treatable as a bank under Californian law?

Posted at 10:58PM on Aug 6th 2007 by Eloise Pasteur

3. Gambling laws are enforced on SL.

Why not banking laws?

Posted at 11:51PM on Aug 6th 2007 by Kahni Poitier

4. Eloise - I understand what you're saying, and you're right in this sense: they can't be found guilty of misoperating a registered bank since they never registered as a bank and probably couldn't have in the first place. That all said, I'm not sure it helps them much as there are definitely criminal fraud charges for *pretending* to be a bank. I'm making this oversimple, but that's the basic point I'm making. Now that I understand what you're saying I think we're largely in agreement.

I appreciate that it's not easy to acknowledge that something you hoped would work out might not too, so I think your article is particularly important for Ginko depositors to read.

Posted at 12:42AM on Aug 7th 2007 by Benjamin Duranske

5. Eloise - it looks to me like you are not, right now, encouraging deposits any more. Is that a fair statement?

Posted at 2:31AM on Aug 7th 2007 by Benjamin Duranske

6. Kahni, the US gambling laws, as I understand them as a foreigner and not a lawyer, prevent all on-line gambling. No weasel words, no messing. The do not prevent online banking, loans between friends or all kinds of other things.

Ginko, to the best of my knowledge, has never called itself a bank. It certainly doesn't offer all the core services I'd expect of a bank, but maybe my expectations are wrong, and it's certainly possible I've missed somewhere that they call themselves a bank. If I loan you $100 and you agree to pay me back $110 next month, does that make me a bank? That, on a bigger and automated scale, is more or less what Ginko have offered. If my memory is correct, they're not fraudulently claiming to be a bank - they're not claiming to be a bank at all and it's still not clear to me why banking laws should apply to them. The vaguely resemble a duck, they make a qu noise rather than quacking like a duck, does this make them a duck? Ultimately that's not for me to judge, but I'd say no.

Benjamin, I don't ever remember encouraging people to deposit money into Ginko. I have said in the past I do, and suggested people assess the risks for themselves. I will quite happily say I'm currently in the queue for withdrawal rather than the queue to deposit money. That's my assessment of the risks, but it's still got to be up to the individual.

Posted at 2:00PM on Aug 7th 2007 by Eloise Pasteur

7. You're completely right, Eloise. I should have been more clear. Someone else (give you a Linden if you *can't* guess who) said SLInsider was "openly promoting deposits and assistance to Ginko." I didn't think that's what you were doing! Good luck with the withdrawal.

Posted at 5:43PM on Aug 7th 2007 by Benjamin Duranske

8. I will also say this: they call what you get a "savings account" which sounds pretty darn bank-y to me, at least as the term is used on this side of the puddle.

Posted at 5:52PM on Aug 7th 2007 by Benjamin Duranske

9. Hope has nothing to do with the future of Ginko. They are a ponzi scheme thats past saturation point. The only certainty now is a lot of people will loose a lot of cash and the owners have already taken their winnings.

The only possible hope is that the real world authorities get involved and throw the book at them.

Posted at 7:49AM on Aug 8th 2007 by TrinityDejavu

10. Err, you don't need a bank to have a "savings account". The fact that you can get one from a bank isn't relevant to the question at hand.

I have numerous accounts in my business, most of which aren't part of any banking activity. An account is nothing more than a record of the amount of money allocated for a particular purpose. If you use any kind of accounting software for your finances, you can go create yourself a few savings accounts right now without ever going near a bank. This is how the word is used on both sides of the puddle, at least by anyone who knows anything about accounting.

Posted at 10:45AM on Aug 8th 2007 by Gaius Goodliffe

11. Also, I forgot this earlier, but he outright said it is a bank.

VB: Can you explain a little more? What was your goal in starting Ginko?

NP: Well, the goal was to create a bank.

http://virtuallyblind.com/2007/07/30/interview-with-ginkos-nicholas-portercarrero/

Posted at 3:16PM on Aug 8th 2007 by Benjamin Duranske

12. Well, if you look now at Ginko Financial's home page, they've decided to cease operations, effective immediately. Apparently they couldn't keep up with the withdrawal demands, and are in the process of converting everyone's funds to Ginko Financial Bonds.

That doesn't help those of us who have been trying to get their money out to pay rent for the last couple of days, but apparently they're not going away permanently. I don't forsee them coming back for some time, and I know I won't be doing business with them again after this.

Posted at 3:09AM on Aug 9th 2007 by Michael Cela

13. reading the notice about Ginko, one part that stuck out , was the comment they will not sell their holding to get some of the money back. As an owner of a bank, I do not see any other option. The SL Banking system is out of control! At this point, banks, WSE, are heading to the Great SL depression! Unless there is Control I feel this is just the tip of the Iceberg!
Kasen Kazan

Posted at 10:39AM on Aug 10th 2007 by Kasen K