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.
Ginko was able to skip town and leave virtually no trail for authorities to follow, if there had been any authorities. Even Linden Lab might not know the identity of the avatar who ran the bank. Company executives declined to be interviewed for this article, 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 Cornell University professor who has been following the Ginko case. Anyway, because Second Life members live in different countries, "it's not at all clear what jurisdiction you would file suit in," he said.
Multiplayer computer-based gaming environments such as Second Life aren't monitored by real-world regulators.
And before the recent announcement, Linden Lab had handed down only two other official bans against anything: It prohibited gambling and simulations of sexual activity involving minors.
"It's been this wild, Wild West kind of atmosphere," said Benjamin Duranske, a lawyer in Boise, Idaho, who runs Second Life Bar Assn. and blogs on the virtual world.
That's the allure. In Second Life players can be anyone (among the pro-bank demonstrators one day last week were a disco dancer, a tentacled human and a mermaid; on another day there was a storm trooper and a very large rabbit) and do nearly anything.
Most activity is tame, with avatars experimenting with interior design or sunning themselves on virtual beaches, although players do buy avatar genitals and use them.
"Usually, we don't step in the middle of Resident-to-Resident conduct," Linden Lab said in a Jan. 8 statement, which was posted on its blog. "But these 'banks' have brought unique and substantial risks to Second Life, and we feel it's our duty to step in."
Money and banks aren't necessary to play Second Life. All players need is a computer and access to the Internet so they can download the software and generate their role-playing avatars
Without money, though, life in Second Life can be dull, and most of the game's 50,000 or so active players keep some cash on hand. They use credit cards or online payment systems such as PayPal to get Lindens and use them to buy things, including property. (There is an endless supply; Linden Lab makes money selling land and can put as much of it on the market as it likes, because in a virtual world there are no physical boundaries.)
The troubles began when banks started popping up.
"There were a few small, thieving institutions," said Sheffie Cochran, who ran a Second Life bank called LLB&T.