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%.
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 in history 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.
Recently, Linden Lab banned all virtual banks from the online role-playing game, giving them until today to shut down, fearful that Ginko wasn't the only one paying crazy rates of return to some with the deposits of others.
Within moments, there was a meltdown. ATMs didn't work when players rushed to withdraw their Linden dollars, which can be exchanged for U.S. currency at a rate that hovers around 270 to 1. Stocks plunged and so did real estate prices.
Avatars, the players' digital doppelgangers, marched with signs saying "Give us our banks back NOW!!" and sent melancholy messages: "We're doomed."
It was nearly a 3-D insurgency.
"People are panicking," said Margaret, a British mother of two who in Second Life is Ragged Delec, an exotic dancer.
Margaret, who asked that her last name not be printed, hasn't been able to retrieve $400 that she had squirreled away. "This has done some serious damage to the Second Life financial industry," she said.
The Ginko debacle and Linden Lab's response to it is raising fresh questions about the need for regulation over -- not to mention the wisdom of -- financial transactions in a place that doesn't exist.
"The whole Second Life adventure encourages user freedom, but it's got so many users, and so much money is flowing in, that you have to face that the community needs some degree of control," said Stephan Martinussen, executive director of the global solutions department at Denmark's Saxo Bank, which had toyed with the idea of opening a virtual branch.
