SL Bank - Risks

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Risks:
There is no Central Bank in Second Life, and with the push of a button Linden Labs could send the economy into an immediate, unforeseen tailspin. It should be noted that Linden Labs states in their TOS that they can terminate your Second Life account and/or take any and all L$ from your SL avatar at anytime for any or NO reason. Thus there is the possibility that Linden Labs could shut down your and/or the bank manager's Second Life account at anytime, which would result in a total loss. Linden Labs maintains that they may terminate the use of the Linden Dollar in the Second Life economy at anytime, effectively “deleting” the Linden Dollar from existence. There is the possibility that Linden Labs could shut down Second Life. It should be noted that Linden Labs is not yet profitable, which further increases that risk. In summary, there is no guarantee that your Second Life account, the Linden Dollar, the virtual world of Second Life and so your SL Bank account will continue to exist at any given time and as per the Linden Labs TOS, there is no recourse that SL Bank could take against them to recover loses caused by the aforementioned.

SL Bank does NOT invest in or receive revenue from any market which has questionable legality, such as gambling, casinos, gambling machines and/or lotto systems. SL Bank does NOT invest in other “banks” or investment projects in Second Life.

SL Bank DOES trade and hedge L$ as well as trade and lease out land. There are risks associated with trading currency, which the investor (you) should be aware of. It is possible to lose money in the process of selling if a panic were to ensue, such as that seen during the release of “CopyBot.” Panics can quickly devalue the L$. A loss could be taken in the buying process if Linden Labs unexpectedly allowed the L$ to gain value while the bank has holdings out of world in USD. We try to minimize the risks of trading currency by hedging and closely following economic activity, but you should understand that these risks do exist. The trading and leasing of land also has risks. There is the possibility that Linden Labs could release a large number of “sims” thus increasing supply and devaluing current land holdings. We monitor upcoming sim auctions, newly released and unnamed sims closely to help decrease this risk, but you should be aware that this risk does exist. There is the chance that a large “land baron” may decide to “cash out” of Second Life and place a large number of sims up for sale, which in turn could unexpectedly drive down the resale value of land holdings. A percentage of total holdings may be used to fund other projects owned by SL Bank. Some of these projects may not become profitable. Our inworld advertising boards provide the bank with additional revenue.

There are other risks associated with the above, which have not been discussed.

Our investment strategy keeps holdings (Deposits/Your money) in the hands of SL Bank and allows us to avoid the high level of risk associated with lending and partaking in venture capital in Second Life, where the vast majority of contracts are verbal and/or based on trust and not real world legal contracts, which can be enforced. It also allows the bank to maintain a high level of liquidity, which is important in a virtual world, where the economy is volatile and change is frequent.

Our current allocation of holdings, found at the bottom of this page, is updated regularly. At no time will your identity or transaction history be made public.